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CONGEESS 


AND 


PHELPS,  DODGE  &  CO. 


AN  EXTPAOEDINABT  HISTOEY ; 


OR. 


AN    ABSTRACT  OF  SO  MUCH  OF  THE  PROCEKPINGS  AND   INVESTIGATIONS 

OF  THE  43D  CONGRESS   (1st  SESSION),   IN  RELATION  TO  "MOIETIES 

AND   CUSTOMS    REVENUE    LAWS,"  AS  PERTAIN  TO  AND 

FURTHER  ILLUSTRATE  THE  CONTROVERSY  BP:TWEEN 

THE  UNITED  STATES  GOVERNMENT  AND   THE 

FIRM  OF  PHELPS,  DODGE  Jb  CO. 


"  Who  ever  knew  truth  put  to  the  worst  in  a  free  and  open  encounter  .i"*— Miltow. 

'•  Let  us  consider  the  reason  (/  the  ease ;  for  nothing  is  law  that  is  not  rfCMOn."— Sib  John  Powkll. 


1875. 


HJ  (olZQ 


INDEX 


Page. 

Affidavits,  rebutting,  of  Boyd  and  Farnum 77,  78 

Algeria,  invoice  G,  March,  1 872 53,  54 

Antwerp,  city  of.     Invoice  G.,  Oct,  1871 48 

Astor  House,  compromise  meeting  at 120 

Bayard,  Thomas,  Hon.  U.  S.  Senator.     Examination  of  B.  G.  Jayne  in  1872..  56-59 

Beck,  Hon.  James  B.,  examination  of  Jayne 65 

'*           "            "            speech  of  in  the  House  of  Representatives 159 

Bliss,  George  and  Noah  Davis,  controversy  between 97-114 

'*          "      speech  before  Committee  Ways  and  Means 97' 

Boards  of  Trade,  action  of  in  reference  to  repeal  of  moieties 5 

Boutwell,  Hon.  George  S.,  advice  in  the  case  of  Phelps,  Dodge  &  Co 21 

"          "           "            remarks  on  the  Moiety  Bill 179 

Boyd,  Samuel,  Custom  House  Officer,  affidavit  of. 77,  78 

Brainerd,  Charles,  illustrations  of  Jayne  and  his  operations 56,  57 

Bribery  of  Merchants'  Clerks  confessed  by  Jayne 60,  61 

Butler,  Gen.,  charged  with  using  stolci  letters 231 

"          *'      employment  as  counsel  by  Jayne 62 

"  "      falsifications  exposed 198,258 

"  "      speech  and  buffoonery  in  the  House  of  Representatives 192-194 

"          "      threats  of  damaging  letters  exposed 22,  23 

Calabria,  invoice  G,  Oct.,  1871 47 

"                   "         Nov.,  1871 50 

Collector  of  New  York,  testimony  respecting  the  leaden  statuary 256 

Comandi,  Joseph,  story  of 142 

Commerce,  Chamber,  annual  dinner  of  in  1874 151 

Committee  of  Ways  and  Means,  Forty-third  Congress 5 

Compromise,  terror  used  as  an  agency  for  compelling 14 

"              whydidthey? 149 

Conkling,  Senator,  advises  heavy  penalties 164,  165 

•'              "         connection  with  the  case  of  Phelps,  Dodge  &  Co 97-161 

Cost,  as  a  basis  for  assessing  duties 109 

Custom  House  abuses 135 

"          "      oaths 15 

"          "      officers,  payments  to  by  Merchants 91 

Davis,  Hon.  Noah,  statement  before  Committee  of  Ways  and  Means 97 

Dawes,  Hon.  H.  L.,  picture  of  Jayne  and  his  associates 169 

"          "        "      speech  in  the  House  of  Representatives 234 

Dodge  and  Butler 137 

Dodge,  Hon.  W.  E.,  closing  statement  of  before  Com.  of  Ways  and  Means. . .  86,  87 

"         "        "       correspondence  with  B.  G.  Jayne 9, 10 


ivi508331 


iV  INDEX. 

Page. 

Dodge,  Hon.  W.  E.,  speech  before  the  Committee  of  Ways  and  Means 7 

««          "        "       testimony  before  Congressional  Investigating  Com 269 

Dodge,  William  E.,  Jr.,  letter  from,  read  before  the  U.  S.  Senate 270 

Duties  assessed  on  market  value 35 

"      how  best  levied,  Hon.  Noah  Davis'  opinions lOS,  109 

Edmunds,  Senator,  remarks  on  the  Moiety  Bill 185 

'«              '•        comments  of  the  Press  on  the  speech  of 189 

Errors,  liability  to  occur  in  making  entries  of  merchandise,  illustrations  of . . .  38,  39 

Farnum,  Samuel  J.,  Custom  House  Officer,  affidavit  of. 77,  78 

Fessenden,  Hon.  W.  P.,  action  in  reference  to  error  in  tariff  of  1864 245 

Foster,  Hon.  Charles,  speech  in  the  U.  S.  House  of  Representatives 227 

Handcuffs,  use  of  by  Jayne  for  intimidation 57 

Heller,  Frank,  affidavits  of 73,  80 

Herve,  dishonest  Clerk  of  Phelps,  Dodge  &  Co 70 

Images,  leaden,  true  story  of 239-242 

Importers,  demoralization  of 158 

Informer,  Curran's  portrait  of  an 61 

Informers,  wages  and  plunder  of,  how  divided 65 

Invoices,  copies  of  those  charged  to  have  been  under  valued 47,  54 

"       duplicate,  meaning  of  charge  of  using 14 

James,  Daniel,  biography  of 28 

James,  D.  Willis 75,  76 

Jayne,  B.  G-.,  examination  and  statement  before  Com.  of  Ways  and  Means,  6,  55,  62,  82 

"         *•      his  character,  drawn  by  Mr.  Beck 167 

"         "       "           "               "       "     "     Dawes 169 

^'         "      illustrations  of  testimony  of,  before  Congressional  Committee  of 

Investigation  in  1872 56,  57,  58 

"        "      violent  conduct  before  Committee  of  Ways  and  Means 6 

Jayne,  the  informer,  a  leaf  from  his  history 125 

Jayne's  contradictory  testimony 68 

Jayne's  moral  suasion 57 

Kennedy,  Clerk  for  Phelps,  Dodge  and  Co.,  his  discharge  and  actions 69 

Letters,  packages  of  private,  stolen  and  used  for  intimadation 62,  63,  64 

Market  value  as  a  basis  of  duties 109 

Martin,  Warwick,  his  affidavit 219 

Merchants  of  New  York  in  council 144 

Merchants,  payments  of  Custom  House  Officers  by 91 

•*             triumph  of  over  the  informers 173 

266 

Moiety  System,  the i^s,  260 

Moore,  P.  N.,  affidavit  of 13,  79 

New  York,  proceedings  of  public  meetings  in  protest  of  action  of  U.   S. 

Revenue  Officials I44 

Nourse,  B.  F.,  of  Boston,  speech  of 7 

Over  payments  on  duties  by  Phelps,  Dodge  &  Co 27 

Pay  back  the  money 14g 

Plielps,  Dodge  &  Co.,  agregate  value  of  their  imports 11 

"           "        "       card  in  reference  to  charges  preferred  by  Gen.  Butler. .  257 


INDEX.  V 

Page. 
Phelps,  Dodge  &  Oo.,  how  their  case  came  before    the    Committee  of  Ways 

and  Means 6 

"  '•         "        terms  of  settlement  by 23 

Plunder  of  Phelps,  Dodge  &  Co.,  how  distributed 65,  161 

Porter,  William  Dodge,  affidavit  of 73,  74,  79 

Post-office  of  New  York,  employment  of  faithless  clerks  in  70 

Press,  comments  of  on  the  Congressional  Investigation 124-147,  153-173,  175-189 

Prices,  remarkable  Fkictuations  in  1872 

Railroad  Iron,  fluctuations  in  price  of  in  1872-3 25 

Representatives,  U.  S.  House  of,  verdict  on  the  "  Moiety"  and  "  Seizure  of 

Books  and  Papers  "  Bill 173 

Report  Committee  of  Ways  and  Means 155 

Roberts,  Hon.  Ellis  H.,  speech  in  the  House  of  Representatives 156-222 

Russia  Sheet  Iron,  liability  to  damage 26-76 

Sanborn  Contracts,  Butler's  connection  with 218 

Schultz,  Hon.  Jackson  L.,  remarks  before  Committee  of  Ways  and  Means. ...  89 

Scott,  Senator,  remarks  on  t]\e  Moiety  Bill 177 

Secret  History  of  the  Phelps,  Dodge  &  Co.  case 147 

Senate,  U.  S.,  action  on  tlie  Moiety  Bill 1 75 

Slander,  Custom  House,  disproved 141 

Spy  System  of  the  Treasury 139 

Story  of  the  Phelps,  Dodge  &  Co,  case,  the  whole  told  connectedly 268 

Theft  of  Papers  acknowledged  by  Jayne 81,  82 

Tin  Plate,  ad  valorem  and  specific  duties  on 28-43 

Tin  Plates,  relation  of  ad  valoiem  to  specific  duties  on 209 

Treasury  Spy  System 139 

Tremain,  Hon.  Lyman,  speech  in  the  U.  S.  House  of  Representatives 237 

Turkey  and  the  United  States  contrasted 141 

Undervaluation  charged  against  Phelps,  Dodge  k  Co. ;  what  it  amounted  to.  21,  27,  29 
''  '■       insignificauceof  amount  charged  to  Phelps,  Dodge  &  Co  190, 191 

Ways  and  Means,  report  of  Committee  of.    155 

Wells,  Hon.  D.  A.,  story  of  the  case  of  Phelps,  Dodge  &  Co 160,  269 

Whitelow,  Clerk  for  Phelps,  Dodge  &  Co 71 

Why  did  they  compromise  ? 149 

Why  they  paid 132 

Woodruff  and  Robinson  difficulty  with  the  Custom  House 64 


CONGRESS 


AND 


The  Case  of  Phelps,  Dodge  &  Co. 


At  the  commencement  of  the  Ist  Se?5sion  of  the  43d  Congress  (December, 
1873,)  there  was  no  one  matter,  upon  which  the  public  sentiment  of  the 
country  was  more  pronounced  and  unanimous,  than  that  the  treatment  to 
winch  the  merchants  of  the  great  seaboard  cities  had  been  recently  sub- 
jected, under  the  then  existing  laws  regulating  Custom  House  proceedings, 
should  be  made  the  occasion  of  early  and  thorough  investigation  by  one  or 
both  branches  of  the  National  Legislature;  and  further,  that  the  scope  of 
this  investigation  should  be  made  sufficiently  comprehensive  to  include 
within  its  sphere  the  subject  of  the  employment  on  the  part  of  the  Govern- 
ment of  professional  spies  and  informers  as  instrumentalities  for  executing 
its  laws,  the  corruption  of  merchants'  clerks  and  other  employes,  the  dis- 
tribution of  moieties,  and  the  arbitrary  seizure  and  unlimited  detention  of 
private  books  and  papers.  The  whole  matter  about  the  same  time  took  a 
more  definite  shape  also,  through  the  action  of  the  National  Board  of  Trade, 
and  the  Chambers  of  Commerce  and  Boards  of  Trade  of  Boston,  New  York, 
Philadelphia,  Baltimore,  and  other  cities — all  of  which  organizations  adopted 
pertinent  resolutions,  condemning  in  tiie  most  forcible  language  the  laws 
under  which  the  Customs  duties  were  collected,  and  appointed  committees, 
composed  of  leading  merchants  and  citizens,  to  visit  Washington  and  ask 
attention  and  redress  from  Congress.  Under  such  circumstances  the  Com- 
mittee of  Ways  and  Means  of  the  House  of  Representatives,  having  been 
duly  vested  on  the  part  of  the  House  with  the  requisite  authority,  early  in 
February,  1874,  entered  upon  an  investigation  of  the  alleged  grievances; 
proper  invitations  to  be  present  having  been  previously  given  to  all  parties 
specially  interested  and  capable  of  imparting  information. 

The  following  are  the  names  of  the  members  of  the  House  of  Representa- 
tives composing  the  Committee  of  Ways  and  Means,  to  whom  the  investiga- 
tion was  intrusted:  Hon.  Henry  L.  Dawes,  Massachusetts,  Chairman;  Hon, 
William  D.   Kelley,  Pennsylvania;    Hon.   H.   C.  Burchard,  Illinois;   Hon. 


6  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Ellis  H.  Robert?,  New  York;  Hon.  John  A.  Kasson,  Iowa;  Hon.  Henry 
AValdron,  Michigan;  Hon.  L.  A.  Sheldon,  Louisiana;  Hon.  Chas.  Foster, 
Ohio;  Hon.  James  B.  Beck,  Kentuck}^;  Hon.  William  E.  Niblack,  Indiana; 
Hon.  Fernando  Wood,  New  York. 

HOW    THfi   CASE    OF    PHELPS,    DODGE   &    CO.    CAME   BEFORE    CONGRESS. 

At  the  outset  it  was  not  the  intent  of  the  Committee  to  make  their  in- 
vestigation the  occasion  oi  specially  reviewing  the  difficulty  of  any  one  firm 
or  individual  with  the  Custom  House  authorities  or  the  Government,  but 
rather  to  devote  their  attention  to  inquiries  of  a  more  general  nature.  Cir- 
cumstances, however,  determined  that  it  should  be  otherwise;  for  on  the 
first  day  of  the  hearing  (February  ITth),  and  subsequenth^  on  the  3d  of 
March,  B.  G.  Jayne,  the  head  detective,  spy  and  informer  of  the  Custom 
House — the  man  above  all  others  most  responsible  for  all  the  iniquitous  and 
arbitrary  proceedings  whicli  had  taken  place  under  the  laws — came  before 
the  Committee,  and,  in  anticipation  of  all  other  witnesses,  and  with  evident 
liope  of  relieving  himself  in  some  degree  from  a  general  public  feeling  of 
odium  and  detestation,  renewedly  accused  Messrs.  Phelps,  Dodge  &  Co.,  in 
common  with  other  merchants,  of  serious  and  grave  offences  against  the 
revenue  laws,  as  his  own  most  efficient  defence  and  justification.  These 
accusations,  moreover,  were  accompanied  by  such  an  amount  of  gross  and 
indecent  abuse  against  the  merchants  of  New  York  in  general,  and  tlie  firm 
of  Phelps,  Dodge  &  Co.  in  particular,  that  the  Chairman  of  the  Committee 
wiis  finally  compelled  to  inform  Mr.  Jayne  that  if  he  did  not  at  once  change 
the  character  of  his  language  and  conduct  himself  properly,  he  would  for- 
bid his  (Jayne's)  further  speaking  and  have  him  removed  from  the  Com- 
mittee room. 

The  controversy  of  the  firm  of  Phelps,  Dodge  &  Co.  with  the  Government 
having  thus  at  the  very  outset  of  the  inquiry,  to  use  an  expression  of  Jayne, 
been  made  "a  sort  of  pivotal  case,^'  and  tiie  accusations  preferred  by  Jayne 
having  been  given  to  the  public  through  the  press,  in  the  fullest  detail,  an 
equally  public  opportunity  for  the  parties  arraigned  to  be  heard  in  reply 
was  immediately  demanded  of  the  Committee. 

Accordingly,  at  the  next  session  of  the  Committee  (March  5th,  1874), 
Mr.  Kelley,  of  Pennsylvania,  in  the  chair,  Mr.  Benjamin  F.  Nourse,  of  Boston, 
arose  and  said  : 

"  I  have  the  honor  to  represent  at  this  hearing  the  National  Board  of 
Trade,  because,  as  one  of  its  officers,  I  was  selected  to  present  its  memorials 
to  Congress  praying  for  amendments  in  the  laws  concerning  the  collection 
of  revenue  from  customs. 


AN  EXTRAORDINARY  HISTORY.  7 

"In  tlic  discussions  of  tlie  National  Board,  only  the  cliaractcr  and  opera- 
tion of  the  laws  and  the  necessary  amendments  have  been  c  )nsidered, 
irrespective  of,  and  as  far  as  possible  uninfluenced  by,  the  cases  when 
importers  have  been  subjected  to  charges  of  fraud  ;  and  it  was  our  purpose 
to  present  our  cause  here  in  the  same  manner,  advocating  it  upon  the 
assumption,  iiowever  rash  tiiat  may  be,  that  the  officers  of  the  customs 
have  acted  only  in  the  line  of  duty,  in  strict  obedience  to  law,  tiiat  we 
might  charge  the  law  itself  as  a  wrong  doer. 

"  Coming  as  petitioners,  we  supposed  we  shotild  be  first  heard  in  support 
of  our  petition  ;  but  we  find  tiiat  an  opponent  of  tlie  desired  reforms  lias 
b(^en  permitted  to  occupy  tlie  first  two  days  of  tliis  hearing.  The  resist- 
ance tlius  presented  consisted  chiefly  in  statements  of  cases  where  an  im- 
porting house  of  liigli  standing  and  character  had  been  charged  witii  frauds — 
wilful,  deliberate,  and  involving  great  moral  tiirpitude.  We  find  ourselves 
confounded  at  the  outset  of  our  work  with  the  very  complication  and 
embarrassment  of  private  interests  which  we  sought  to  avoid  as  obscuring 
the  real  merits  of  the  subject.  To  clear  all  this  away  and  be  enabled  to 
bring  our  i)ropositions  on  their  merits  alone  before  you,  we  ask  that  these 
private  matters,  in  which  guilt  or  innocence  can  have  no  proper  influence 
upon  our  special  subject,  and  in  the  discussion  of  which  we  can  tnke  no 
l)art,  shall  be  first  disposed  of  and  be  dismissed  from  before  this  Com- 
mittee. 

"  For  myself,  and  I  believe  for  the  other  representative  merchants  present, 
I  respectfully  suggest  to  the  Committee  that  after  the  extraordinary  accu- 
sations brought  in  this  place,  in  terms  which  you  heard,  and  I  need  not 
describe,  against  the  house  of  Phelps,  Dodge  &  Co.,  it  is  but  simple  justice 
that  Mr.  Dodge,  who  was,  and  is,  present,  shall  have  an  opportunity  of 
being  heard  in  his  defence  and  explanation,  if  he  shall  choose  to  present 
them,  before  that  private  matter  shall  be  dismissed.  For  that  purpose,  I 
propose  to  give  way  at  this  time,  but  with  the  hope  that  the  Committee  will 
then  resume  the  hearing  upon  the  proposed  amenuments,  to  be  followed  by 
the  explanations  and  testimony  of  merchants." 

Thk  Chairman. — The  Committee  has  anticipated  the  possibility  of  such  an 
application,  and  had  determined  that  if  such  an  application  came  from  the 
parties  with  whom  you  are  associated,  it  should  be  acceded  to  ;  with  this 
understanding,  however,  thut  the  hearing  of  Mr.  Dodge  is  to  constitute  no 
precedent  for  further  interruption  in  the  hearing  of  those  parties  who  are 
here  specially  with  reference  to  the  general  law.  On  this  condition,  Mr. 
Dodge  will  now  be  heard. 


^  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

STATEMENT  OF  MR.  WM.  E.  DODGE  BEFORE  THE  COMMITTEE  OF 
WAYS  AND  MEANS  AT  AVASHINGTON,  MARCH  5th,  1874. 

Mr.  Chairman,  in  coming  before  this  Committee  with  my  associates  of  the 
Chamber  of  Commerce,  I  had  expected  simply  to  present  my  views  in 
reference  to  the  revenue  laws  and  their  administration.  I  had  not  thought 
of  entering  upon  any  specific  case,  and  as  our  own  has  had  sufficient  of 
publicity,  it  was  not  my  intention  to  trouble  the  Committee  with  any 
particular  statement  in  reference  to  it.  But  the  very  extraordinary  course 
taken  by  the  Government  official  on  the  first  meeting  of  the  Committee,  and 
more  particularly  the  manner  in  which  he  addresj^ed  some  of  its  members  at 
the  close  of  the  session,  showing  copies  of  what  he  called  fraudulent  and 
duplicate  invoices,  thus  endeavoring  to  make  an  impression  adverse  to 
myself  and  my  firm,  has  placed  me  under  the  necessity  of  speaking  in  my 
own  behalf.  I  feel  under  obligation  to  the  Committee  for  the  opportunity 
to  make  such  statements  in  regard  to  this  matter  as,  I  think,  will  satisf}'- 
them  that  a  very  great  wrong  has  been  done  to  us,  and  I  cannot  better  give 
the  Committee  a  clear  insight  into  the  whole  management  of  the  revenue 
detective  laws  as  they  are  now  administered,  than  by  the  recital  of  our  own 
connection  with  them. 

Before,  however,  entering  at  length  upon  the  remarks  which  I  have  to 
make,  I  would  like  to  ask  the  special  agent  of  the  Treasury  Department  to 
look  at  the  official  correspondence  which  was  obtained  from  the  Treasury 
Department,  and  state  whether  it  contains  all  the  correspondence  on  the 
subject,  excepting  the  letters  which  were  referred  to  by  him  as  having 
been  written  by  me  to  him,  and  his  repl}^  In  the  course  of  my  remarks  I 
shall  have  to  refer  to  these  official  letters  and  documents,  and  I  simply 
want  to  know  before  I  start  whether  these  letters  and  documents,  as  they 
are  there  published  officially  from  the  Treasury  Department,  are  all  that 
have  a  bearing  on  the  case. 

The  Chairman'. — I  think  you  had  better  make  your  own  statement.  We 
would  not  like  to  see  a  discussion  between  you  and  the  Treasury  agents. 

Mr.  Dodge. — I  want  simply  to  avoid  that.  After  our  case  had  been  be- 
fore the  public  for  some  time  and  we  had  paid  our  money,  the  press,  not 
understanding  the  matter,  as  we  believe,  was  constantly  confusing  the 
million  dollar  suit  with  the  $271,000  paid,  and  thus  creating  the  impres- 
sion all  over  the  country  that  the  $271,000  was  the  amount  of  the  duties 
which  the  Government  were  entitled  to,  and  of  which  it  had  been  de- 
frauded by  alleged  undervaluations.  I  simply  said  to  our  attorney,  who 
was  a  personal  friend  of  Jayne's,  "Great  injustice  is  being  done  to  us 


AN  EXTRAORDINARY  HISTORY.  9 

through  the  press,  and  I  think  it  is  through  the  influence  of  the  Govern- 
ment officials.  We  have  paid  this  money,  and  now  a  wrong  impression 
has  gone  abroad,  and  we  have  had  no  means  of  contradicting  it  officially. 
It,  therefore,  appears  to  me  that  Jayne  could  write  a  letter  in  which  he 
might  state,  simph',  that  the  suit  for  a  million  dollars  was  pro  forma  ;  that 
the  $271,000  paid  was  in  compromise  or  settlement,  and  was  not  the 
amount  of  the  duties  due  to  the  Government,  but  that  $6,658.78  was  the 
total  amount  of  undervaluation,  and  $l,6fi4  the  total  amount  which  the 
Government  was  entitled  to  as  duty."  My  attorney  said,  "Mr.  Jayne  will 
do  that,  I  am  sure."  1  then  drafted  the  letter  which  Jayne  read  here.  My 
attorney  took  it  to  him.  After  a  day  or  two  I  asked  him  if  he  had  had 
Jayne's  reply.  He  said,  "  No  ;"  that  Jayne  was  very  ugly,  and  that  he 
could  not  get  anything  satisfactory,  and,  therefore,  did  not  take  anything. 
We  have  never  seen  the  letter  which  Jayne  said  he  had  written  to  me  and 
which  we  had  supj)ressed.  The  letter  was  not  sent  to  us.  It  may  pos- 
sibly have  been  handed  to  Mr.  Wakeman,  and,  of  course,  in  printing  tho 
proceedings  we  could  not  publish  a  letter  which  wo  never  received.  As 
soon  as  I  heard  of  it  here  I  immediately  telegraphed  to  my  partner  in  New 
York  to  know  if  any  such  letter  was  in  our  possession,  because  we  have 
kept  all  the  papers  in  this  case  distinct.  He  telegraphed  me  in  reply  that 
he  can  find  no  letter  from  Mr.  Jayne  dated  on  the  26th  of  March,  and  that 
the  Old}'  letter  he  finds  is  the  one  under  date  of  March  31,  published  in  our 
statement.* 

*  The  following  extract  from  tlie  statement  made  by  Jayne  before  the  Committee  further 
explains  tlie  matter  liere  referred  to  by  Mr.  Dodire. 

After  referring  to  certain  letters  addressed  to  him  (Jayne)  by  Hon.  Noah  Davis,  lie  said, 
"I  received  this  one  from  William  K.  I)od«re:  " 

"B.  G.  Jaynk — Dfar  Sir:  Now  that  the  matter  In  controverey  l)ot\veen  our  firm  and  the  Government 
has  been  amicubly  adjusted,  as  no  many  mU^tatementH  have  appeared  in  the  paptrrs,  I  shall  be  greatly 
obli;j;ed  for  a  Hne  from  yon  staling  the  facts.  Very  truly  youru, 

"WILLIAM  E,  DODGE." 

Inclosed  in  that  was  a  letter  prepared  for  me  to  sign,  and  wliidi  was  also  in  the  hand- 
writing of  Mr,  Dodge.     It  was  in  these  words: 

"  In  reply  to  your  note  of  this  date,  I  consider  It  due  to  you  to  cay  that  the  million  of  dollars  for  which 
a  pro /o?f«a  suit  was  instituted  against  your  firm  was  not  for  that  sum,  but  the  amount  of  the  several 
invoices  which  contained  items  that  it  was  contended  were  entered  below  their  market  value,  and  might, 
under  a  strict  rulintr  of  the  Keveune  Department,  forf«'it  the  entire  invoices. 

"  Hence,  your  a^ireeuient  to  have  tliese  items  stricken  out  of  the  invoices,  and.  In  order  to  save  the 
vexation  of  a  protracted  lawsuit,  you  oflfered  to  i)ay  the  Government  the  aggregate  of  these  disputed 
items,  amounting  to  $271,000,  but  not,  as  some  suppose,  an  extra  duty  claim,  which  was  the  entire  value 
of  the  articles  in  contest.  The  actual  difference  in  duty  paid  at  the  time  of  the  entry  and  that  claimed 
by  the  (Jovenmient  was  a  very  inconsiderable  amount,  which  ii  few  thousand  dollars  would  have  covered. 
Thus  the  Government  has  received  in  the  form  of  a  money  profit  a  sum  far  in  excess  of  anything  they 
might  claim  for  duty.  Misstatements  in  the  pai)ers  a-*  to  extni  mvoices  have  conveyed  a  wrong  impres- 
sion.   They  were  not  duplicated,  but  copies  of  the  bills  received  by  the  firm  in  Liverpool  from  the  manu- 


10  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

It  is  not  a  vory  agreeable  duty,  Mr.  Clmirman  and  gentlemen,  altlioufj^h  I 
feel  it  an  important  one,  to  stand  before  you  to-day  to  defend  my  good 
name  and  the  name  of  my  firm  ;  but  I  feel  that  it  is  a  privilege,  because 
you  are  here  as  the  representatives  of  the  Government,  before  whom  we 
have  never  had  an  opportunity  to  make  any  statement  other  than  our 
printed  one.  In  the  statement  that  I  now  submit  I  will  show  the  work- 
ings of  the  law,  by  giving  an  outline  of  the  particulars  in  our  own  case, 
without  entering  into  all  the  minutiae. 

At  the  pre.-ent  time,  and  witiiout  any  agency  whatever  upon  rur  part, 
an  attempt  has  been  made  to  parade  our  case  before  the  public  again,  with 
the  assurance,  which  was  made  originally,  that  it  is  one  of  the  most  ter- 

facturers  for  some  special  articles  ra  mufactured  to  order  and  on  their  own  contracts.    The  claim  that 
your  firm  had  been  in  the  habit  of  bribing  Custom  House  officers  was  not  sustained  by  my  examination." 

That  was  sent  to  me  by  the  Hon.  Abram  Wakeman,  tlie  attorney  of  the  firm,  for  my  sig- 
nature. I  refused  to  sign  it.  This  paper  from  wliich  I  liave  been  reading  is  in  Mr.  Wake- 
man's  liandwriting.  Wlien  I  refused  to  sign  it  he  wanted  possession  of  the  letter;  but  I 
refused  to  let  it  go  back  without  his  certifying  to  the  copy  of  it.  Tliis  their  attorney  did; 
but  before  lie  did  that  he  had  sent  this  letter  : 

"  Deak  Mn.  Jayne  :  Please  let  me  have  the  draught  memorandum  of  Mr.  Dodge  that  I  left  with  you. 
I  will  return  it  in  a  few  moments.    I  want  it  in  preparing  the  sort  of  a  letter  that  I  indicated  last  night." 

He  had  indicated  that  he  would  write  a  different  letter  for  me  to  sign.  In  reply  to  this 
letter  from  Mr.  Dodge  I  wrote  to  him  on  the  26th  of  March,  1873,  as  follows : 

"  William  E.  Dodge— ilfy  Dear  Sir :  Your  note,  with  accompanying  memorandum,  was  handed  to 
me  by  Mr.  Wakeman,  and  in  reply  I  would  say  that  it  would  give  me  pleasure  to  make  any  statement  in 
regard  to  my  belief  in  regard  to  your  own  personal  participation  in  the  irregularities  of  the  firm.  The 
suit  instituted  was  for  the  recovery  of  full  invoices  entered  in  violation  of  the  first  section  of  the  Act  of 
March  .3.  1883.  That  statute  requires  that  all  merchandise  shall  be  invoiced  at  the  actual  purchase  price, 
and  that  the  owner,  or  his  agent,  is  required  to  verify  the  truth  of  the  invoices  on  oath  before  the  United 
Spates  Consul  nearest  the  place  of  shipment.  The  owner  or  his  agent  is  also  required  to  verify  the 
truth  of  the  invoices  at  the  time  of  making  the  statement. 

"The  facts  concerning  the  invoices  and  the  entries  on  which  suit  was  instituted  are,  first,  the  price 
paid  for  the  goods  was  not  truthfully  stated  ;  second,  the  price  was  stated  less  than  the  purchase  price; 
third,  the  oath  before  the  Consul  at  Liverpool  did  nut  conform  to  the  truth;  fourth,  the  invoice  sworn  to 
was  a  false  invoice  ;  fifth,  the  entry  sworn  to  was  false;  sixth,  the  copies  of  invoices  showing  the  true 
purchase  price  were  found  in  the  possession  of  your  firm;  seventh,  there  is  no  circumstance,  aside  from 
the  high  standing  of  your  house,  which  distinguishes  this  case  from  any  other  case  of  violation  of  the 
law,  except  a  belief  on  my  part  that  you  personally  knew  nothing  of  the  infringement  of  the  statute; 
eighth,  that  statute  of  18G3  is  plain  and  explicit;  ninth,  it  seems  unnecessary  to  travel  outside  the  record 
to  confirm  or  contradict  statements  made  without  my  knowledge  or  authority. 

•'  Allow  mo  to  add  that  it  seems  to  me  unnecessary  to  k<'ep  up  an  agitation  of  this  matter,  and  that, 
while  I  have  refrained  from  saying  more  tlian  duiy  required,  I  find  it  absolutely  impossible  to  falsify  the 
record  of  facts  for  the  accommodation  of  any  oqe." 

Jayxe. — "  In  publishing  tiie  eorresi)ondonce  in  this  case  to  the  world,  Phelps,  Dodge  &  Co. 
did  not  publish  this  last  letter,  and  if  tiiat  omission  does  not  come  under  the  old  ma.xim,  that 
the  suppression  of  truth  is  the  assertion  of  falsehood,  I  would  like  to  know  what  does." 

As  the  statement  of  Mr.  Dodgo  above  given  shows  that  the  letter  written  by  Jayne  was  never 
received  by  the  person  to  whom  it  was  said  to  be  addressed,  the  moral  maxim  made  use  of 
by  Jayne  to  sharpen  his  denunciation  of  the  persons  whom  he  had  injured,  entirely  loses  its 


AN  EXTRAORDINARY  HISTORY.  11 

rible  cases  that  has  ever  occurred  in  the  liistory  of  the  American  revenue 
service,  and  that  the  evidence  of  fraud,  premeditated  and  continued  for  a 
series  of  years,  is  beyond  all  question.  We  trace  tliese  statements  directly 
to  parties  who  have  participated  in  the  money  extorted  from  us.  It  has 
been  intimated  that  our  case  was  to  come  before  Congress,  to  be  more 
thoroughly  ventilated,  and  that  we  are  to  be  shown  up  as  men  who  have 
deliberately  undertaken  to  defraud  the  Government.  All  this  is  done  to 
strengthen  the  system  which  has  placed  in  the  pockets  of  these  people 
these  large  sums. 

There  are  certain  questions  which  will  naturally  arise  in  the  mind  ot 
ev^ery  man  who  has  his  attention  called  to  the  consideration  of  our  case. 

The  first  is.  How  could  a  firm  which  has  been  pur»uing  a  business  for  forty 
or  fifty  years,  and  which  has  heretofore  sustained  a  reputation  for  honest  deal- 
ings, not  only  with  Government  but  with  individuals,  and  ichich,  in  the  course 
of  more  than  forty  years'  transactions  with  the  customs,  has  never  until  now 
had  any  difficulty  of  any  kind  with  the  Government,  and  which  might  he  sup- 
posed, at  least,  to  be  beyond  the  desire  of  accumulating  a  few  hundred  di)llars, 
all  at  once  descend  to  the  mean  and  contemptible  business  of  defrauding  the 
revenues  out  of  a  sum  comparatively  insignificant?  The  next  question  is 
al}out  the  alleged  duplicate  and  fraudulent  iiivoices,  whicli  have  been  so  ex- 
tensively paraded  before  the  public.  Next,  how  is  it  possible,  unless  members 
of  the  firm  felt  that  they  were  guilty  and  afraid  to  go  before  the  Court,  that  they 
could  be  induced  to  pay  $271,000  to  compromise  the  demand  against  them 
rat/ er  than  contest  the  points  at  issue? 

In  regard  to  the  first  I  will  say  that  we  have  imported  between  three  and 
four  hundred  million  dollars'  wortli  of  goods.  We  have  paid  to  the  United 
States  Government  more  than  $50,000,000  in  duties.  And  I  may  say  it 
with  perfect  confidence  that  our  good  name  and  our  integrity  has  never 
been  assailed  in  these  many  years  until  it  was  assailed  by  the  Government. 
And  in  what  wa}^  and  how  was  it  assailed?  Were  there  no  rights  which 
Ijonorable  and  upright  merchants  might  claim  or  demand  of  the  Govern- 
ment— men  who  had  conducted  for  such  a  series  of  years  their  business 
honestly  and  faithfully  ?  If  error,  or  even  fraud  had  been  suspected,  private 
individuals  would  certainly  have  taken  some  other  method  than  that 
adopted  to  have  ascertained  and  brought  it  to  the  notice  of  the  firm,  tliat 
they  might  have  an  opportunity  for  explanation.  As  tlw  Custom  House 
was  managed  a  quarter  of  a  century  ago  that  would  have  been  the  course 
pursued.  There  never  was  a  collector  in  the  port  of  New  York  in  those 
days  who,  under  such  circumstances,  would  not  have  sent  for  the  head  of 
the  firm  and  said:  "Sir,  there  are  such  and  such  charges  here,  and  before 
we  take  any  steps  in  relation  to  them  I  want  you  to  go  before  the  proper 


12  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

officers  and  make  such  explanations  as  may  enable  them  to  decide  as  to 
what  course  it  is  proper  to  pursue."  This  is  not  the  way  business  is  done 
now,  by  long  odds.  The  first  knowledge  or  hint,  in  the  forty  odd  years  of 
business  that  I  have  had  with  the  Government,  that  I  was  accused  of  any 
dereliction  of  duty  was  when,  sitting  at  the  board  of  one  of  our  large 
institutions,  I  received  a  note  from  my  partner  asking  me  to  come  to  the 
Custom  House.  I  went  there;  was  taken  into  the  little  dark  hole,  lighted 
by  gas,  where  this  business  is  done,  and  there,  for  the  first  time,  I  con- 
fronted this  man  Jayne.  The  then  district  attorney.  Judge  Davis,  was 
also  there,  and  my  junior  partner,  Mr.  James.  I  had  no  more  idea  of 
what  we  were  called  there  for  than  the  man  in  the  moon.  Not  a  thought 
had  ever  crossed  my  mind  that  there  was  anything  wrong  with  the 
Custom  House.  Mr.  Jayne  opened  upon  me  in  his  bland  way,  and  said 
that  he  was  very  sorry  to  be  obliged  to  say  that  the  Government  was  in 
possession  of  facts  to  show  that  the  firm  with  which  I  was  connected  had 
been  engaged  for  a  series  of  years  in  deliberate  attempts  to  defraud  the 
revenue;  and  that  it  had  been  done,  first,  by  a  systematic  perjury  in  con- 
nection with  the  Custom  House  oaths,  and,  secondly,  by  false  and  dupli- 
cate invoices;  that  he  supposed  I  knew  very  well  what  were  the  penalties 
under  such  circumstances,  stating  that  every  breach  of  the  law  in  the 
cases  of  perjury,  of  which  we  had  been  guilty  for  a  great  many  years, 
and  many  times  a  year,  subjected  us  to  a  fine  of  $5,000,  and  to  imprison- 
ment for  not  less  than  two  years;  that  tiie  false  invoices,  and  the  under- 
valuation resulting  from  them,  forfeited  the  entire  amount  of  those  invoices. 
That  was  the  first  salutation.  "And  now,"  said  he,  "I  have  a  warrant 
ready,  from  the  District  Court,  to  take  possession  of  your  books  and 
papers." 

Of  course  it  was  a  thunderbolt  which  I  was  not  prepared  for.  I  had 
not  seen  this  man  Jayne  before.  I  knew  Judge  Davis;  I  knew  him  to  be 
an  honorable,  upright  man.  I  turned  to  the  Judge  and  said,  "  Judge 
Davis,  this  is  a  very  strange  proceeding.  It  is  all  new  to  me.  I  deny  the 
whole  of  it,  and  I  defy  this  man,  or  any  other  man  to  produce  a  duplicate 
invoice  ever  received,  or  ever  used,  or  ever  known  of  by  the  firm  of  Phelps, 
Dodge  &  Co."  "Well,"  said  Jayne,  "you  may  deny  it,  but  I  have  got  them 
all  here,  and  I  have  affidavits,  too,  to  the  same  effect.  What  is  more  than 
that,  I  have  evidence  that  you  have  tampered  with  the  officers  of  the  Gov- 
ernment." 

I  said  to  Judge  Davis,  "There  is  nothing  in  our  business  that  we  are 
unwilling  to  exhibit  to  you  or  to  the  Government.  There  is  no  necessity 
for  a  warrant  to  take  po.ssession  of  our  books.  If  there  are  any  books  or 
papers  that  are  in  our  possession  that  are  needed  by  the  Government  to 


AN  EXTRAORDINARY  HISTORY.  13 

establish  their  case,  they  are  entirely  at  your  service;  no  objection  what- 
ever will  be  made  to  your  having  them."  Judge  Davis  then  said,  "  I  have 
no  knowledge  of  the  matter  other  than  the  papers  submitted  to  me."  He 
thought  it  was  a  case  justifying  further  investigation.  Judge  Davis  then 
turned  to  AJr.  Jayne  and  said,  "Mr.  Jayne,  nothing  can  be  more  fair  than 
the  proposition  made  by  Mr.  Dodge.  Now,  wlatever  books  you  need  Mr. 
Dodge  says  you  can  have;  you  do  not  want  that  warrant.''  Mr.  Jayne 
then  said  he  would  go  with  us  to  our  store  and  get  what  books  he  needed. 
We  went  to  the  store,  passed  into  our  oflBce  and  into  the  back  room.  I  said 
to  my  partners,  "There  is  a  charge  made  against  us,  and  a  very  fearful  one, 
namely,  of  a  systematic  attempt  to  defraud  the  revenue,  and  of  perjur}- — 
making  us  liable  to  imprisonment  and  fine.  This  is  all  new  to  me.  Here 
is  the  United  States  officer  who  has  come  to  take  possession  of  our  books. 
I  have  told  him  that  he  need  not  come  with  a  warrant,  but  that  he  can  have 
any  books  or  papers  that  he  pleases."  Jayne  had  two  or  three  of  his  men 
with  him.  Our  young  men  at  their  desks  were  looking  on  with  aston- 
ishment. They  saw  that,  something  was  happening.  Mr.  Jayne  took  out 
a  list  of  books  that  he  wanted,  invoice  books,  cash  books,  letter  books  and 
papers,  a  cart  was  backed  up  to  the  door,  and  his  men  took  out  the  books 
and  carted  them  away.  Mr.  Jayne  then  took  out  his  paper,  and  looked 
over  it,  and  said,  "There  is  one  book  that  I  want  which  1  do  not  see  here. 
It  is  a  red  covered  book  with  a  clasp  to  it."  I  asked  my  partners  if  they 
knew  of  any  such  book.  I  knew  that  I  had  never  seen  such  a  book  in  the 
office.  There  were  none  of  the  clerks,  confidential  book-keepers,  cashier,  or 
either  of  the  partners  who  had  ever  heard  of  such  a  book.  "  Oh,"  said 
Jayne,  "  there  is  such  a  book  here,  and  we  are  bound  to  have  it."  Said  I, 
"  In  the  upper  part  of  our  store  there  is  a  room  where  our  books  have  been 
stored  away  for  the  last  twenty  years.  You  can  take  our  porters  and 
lanterns  and  go  up  there  and  spend  as  much  time  as  you  please  searching 
for  the  book  you  want."  I  never  heard  of  such  a  book,  and  am  sure  there 
never  was  such  a  one.  But  in  the  statement  of  the  district  attorney  he  says 
that  one  very  important  book  was  kept  Irom  that  search. 

Now,  gentlemen,  I  want  to  let  you  understand  the  manner  in  which  the 
Government  deals  with  the  merchants  of  the  country  under  the  operation 
of  the  law.  I  am  not  here  to  contradict  the  remaiks  made  by  this  special 
agent,  that  he  was  fulfilling  his  duty,  and  that  he  was  engaged  in  the  legit- 
imate business  of  guarding  and  defending  the  Government  against  the 
frauds  of  the  merchants  of  the  country.  The  laws,  I  have  no  doubt,  have 
been  all  arranged  and  made  so  as  to  enable  this  work  to  be  carried  out.  I 
have  no  doubt  that  he  has  gone  on,  as  he  said  yesterday,  and  that  he  has 
been  very  industrious.     Almost  any  man  would  be  who  was  receiving  the 


14  congrp:ss  and  phelps,  dodge  &  co. 

same  emoluments  as  he  receives  for  his  labor.  You,  gentlemen,  have  a  spe- 
cific salary;  but  this  agent  has  received  about  twice  the  salary  of  the  Pres- 
ident of  the  United  States,  and  about  twenty  times  the  salary  of  any  of  you 
in  a  given  time  of  service,  lie  ought  to  work  harder  and  to  be  a  most 
talented  man,  as  he  stated  to  you  yesterday. 

Now,  gentlemen,  this  general  bugbear  of  false  duplicate  invoices  has  been 
paraded  over  this  country,  and  not  only  over  this  country,  but  the  dis- 
patches have  been  published  (not  all  of  them,  but  some  of  them)  in  London, 
in  St.  Petersburg,  in  France  and  Spain,  and  in  India,  in  which  places  we 
have  been  in  the  habit  of  doing  business  for  many  years.  It  was  not  so 
much  that  I  feared  the  jail  which  induced  me  to  make  this  compromise;  it 
was  not  so  much  that  1  dreaded  the  accusation  of  perjury;  but  it  was  that 
$1,750,000.  That  was  the  pistol  held  to  my  ear.  It  was  money  or  ruin; 
that  is  just  what  it  was  and  nothing  more,  and  what  it  was  intended  to  be. 
And  our  case  is  but  a  repetition  of  other  cases.  The  victim  is  made  to  un- 
derstand tiiat  his  is  one  of  the  most  horrible  cases  ever  examined  by  the 
detectives.  I  was  told  by  Jayne  that  he  regretted  very  much  to  say  that 
he  had  never  been  called  upon  in  his  life  to  examine  so  bad  a  case  as  this 
was.  Our  papers  had  all  been  taken  from  us;  we  had  this  terrific  indict- 
ment preferred,  and  we  had  no  specifications  of  its  details.  We  have  never 
been  able,  up  to  this  day,  to  obtain  a  statement  of  the  specific  charges,  and 
what  were  the  specific  items  in  the  various  invoices  of  $1,750,000  which 
went  to  make  up  the  $271,000  that  we  paid.  We  knew  what  had  been  the 
rulings  of  the  courts  in  New  York — that  the  least  taint  in  an  invoice,  an 
omission  of  charges,  etc.,  would  subject  the  entire  invoice  to  confiscation; 
and  while  the  district  attorney  and  other  Federal  ofiicials  were  to  have  their 
fees  on  the  amount  collected,  we  did  not  feel  like  going  before  the  court. 
We  had  the  distinct  promise  that  we  should  have  an  itemized  statement  of 
the  particular  items  of  the  various  invoices  to  which  objection  was  made, 
but  we  never  have  from  that  day  seen  it,  or  known  what  those  items 
are  for,  only  as  we  have  been  able  to  guess  from  simply  having  the  names 
of  the  vessels  sent  to  us.  The  invoices  by  those  vessels,  all  put  together, 
amounted  to  i£l 63,000,  or  between  seven  and  eight  hundred  thousand 
dollars.  The  first  time  we  ever  obtained  anything  in  the  nature  of  a 
detailed  statement  was  when  we  received  the  names  of  the  vessels.  Sub- 
sequently we  understood  there  were  two  entire  invoices  forfeited  to  the 
Government,  on  account  of  an  omission  of  charges  amounting  to  about 
$1,000.  We  have  never  been  able  to  find  out  what  those  two  invoices 
were.  We  do  not  know  to  this  day,  but  we  suppose  from  the  amount  of 
charges,  that  they  were  invoices  of  block  tin,  shipped  from  Penang.  Tin 
was  bought  at  Penang,  but  in  order  to  ship  it  in  an  American  vessel   it 


AN  EXTRAORDINARY  HISTORY.  15 

was  sent  to  Singapore,  at  a  cost  of  several  hundred  dollars.  The  prices 
of  this  article  are,  as  a  general  thing,  the  same  at  Singapore  as  they 
are  at  Penang,  just  as  the  prices  of  articles  would  be  about  the  same 
in  the  City  of  Philadelphia  and  the  City  of  New  York.  Under  the  rulings 
of  the  Treasury  Department  goods  shipped  from  Belfast,  with  the  con- 
sular oath  taken  at  Belfast,  by  way  of  Liverpool,  simply  pay  the  duty 
they  would  have  paid  if  they  had  been  shipped  direct  from  Belfast.  Under 
this  ruling,  and  with  that  understanding,  we  never  thought  of  such  a 
thing  as  adding  to  the  invoice  the  cost  of  hhipping  this  block  tin  from 
Singapore  to  Penang.  It  was  a  mere  matter  of  convenience;  the  amount 
was  not  added  to  the  invoice,  but  was  added  in  our  account  current  from 
our  correspondent  at  Penang.  In  his  annual  account  current  he  charged 
for  telegrams  and  freights  between  the  two  places,  nuiking,  in  the  whole, 
something  like  $1,000,  and  that  amount,  I  suppose,  was  what  they  claimed 
vitiated  and  forfeited  these  two  invoices.  We  did  not  know  how  it  was; 
the  Government  had  our  books  and  papers;  we  could  not  get  any  accurate 
idea  as  to  the  amount  which  the  Government  claimed  had  been  under- 
valued; we  made  every  eflbrt  to  obtain  infornialion,  but  all  that  we  could 
learn  was  that  it  was  small  in  proportion  to  the  amount  of  the  invoices. 
I  then  made  this  proposition  to  Judge  Davis  :  that  they  should  go  over  the 
invoices  that  were  objected  to,  take  out  the  various  items  that  were  under- 
valued, aggregate  the  amount,  and  we  would  give  our  check  for  it.  These 
invoices  they  pretended  to  examine,  but  we  were  never  present  at  any 
such  examination,  nor  was  any  representative  of  our  house,  and  we  have 
no  idea  of  the  manner  in  which  they  made  up  this  $271,000.  This  man 
(Mr.  Jayne)  probably  has  it  in  his  carpet  bag,  but  we  do  not  know  any- 
thing about  it.     All  that  we  could  learn  was  that  it  was  a  horrible  ca.sc. 

Now,  in  regard  to^  the  oath.  Mr.  Jayne  presumes  that,  having  been  a 
merchant  for  forty  years,  I  did  not  know  what  a  Custom  House  oath  was. 
In  that  interview  in  the  dark  place  h^  took  out  the  oath  and  read  it  to  me 
as  he  read  it  to  you  yesterday — the  oath  taken  by  our  firm  in  Liverpool 
when  the  goods  were  shipped.  But  he  did  then  exactly  what  he  did  yester- 
day— he  said  there  was  nothing  there  about  market  value  ;  that  it  was  an 
oath  that  that  was  the  exact  cost  of  the  goods.  And  so  it  is  ;  and  that  has 
been  the  oath  since  17^9,  for  aught  I  know.  It  is  a  common  thing  in  New 
York  to  say  that  something  of  no  account  is  about  equal  to  a  Custom  House 
oath.  We  are  not  accustomed  to  swear  falsely,  but  nine  tenths  of  "all  the 
entries  made  in  the  city  of  New  York,  according  to  the  letter  of  this  oath, 
would  come  under  the  implication  of  perjury.  Mr.  Jayne  did  exactly  on 
that  occasion  as  he  did  yesterday — he  read  one  form  but  he  did  not  read 
the  other.      Here  (exhibiting  a  paper)  is  the  oath  in  which  we  swear  that 


16  CONGRESS  AND  PHELPS,  DODGE  &   00. 

the  invoice  represents  the  actual  cost  and  quantity  of  the  goods,  and  imme- 
diately on  the  same  page,  Form  No.  2,  the  Consul  of  the  United  States  at 

Liverpool  certifies  that   he  knows  Mr.   R to   be   the   person   who 

purchased  the  goods,  wares  and  merchandise  therein  contained,  and  who 
thereupon  declared  in  his  presence  that  it  was  his  intention  to  make  the 
entry  of  such  goods,  wares,  and  merchandise  in  the  port  of  New  York. 
And  he  goes  on  ;  '*  And  I  do  further  certify  that  I  am  satisfied  that  the 
person  making  this  declaration  is  the  person  he  represents  himself  to  be,  and 
that  the  market  values  and  wholesale  prices  of  the  goods,  wares  and  mer- 
chandise described  in  said  invoice,  iii  the  principal  markets  of  the  country 
at  the  time  of  exportation,  are  correct  and  true." 

Now,  when  my  partner  in  Liverpool  went  to  Mr.  Dudley,  United  States 
Consul,  he  said:  "Mr.  Dudley,  how  can  I  take  such  an  oath  as  this? 
Here  is  an  invoice  of  goods  that  cost  '60s.,  and  I  have  invoiced  them  at  36s. 
to  meet  market  values.  If  I  invoice  them  at  30s.  and  export  them  to  New 
York,  we  shall  be  liable  there,  if  not  to  forfeiture,  at  least  to  have  the  price 
so  advanced  as  to  cover  not  merely  the  difference,  but  also  the  penalty  for 
undervaluing."  "Now,"  said  he,  "I  have  added  6s.  to  the  cost,  and  you 
ask  me  to  swear  that  it  is  the  absolute  cost."  Mr.  Dudley  said :  "  Mr. 
James,  all  we  mean  by  that  is,  that  it  is  correct,  and  that  it  is  the  fair 
market  value."  Then  the  invoice  comes  to  New  York,  and  I  go  to  the 
Custom  House  and  am  presented  with  the  oath  "that  the  invoice  which  I 
have  now  brought  contains  a  just  and  faithful  account  of  the  actual  cost 
of  such  goods,  wares  and  merchandise."  1  say  to  the  deputy  collector: 
"  We  have  added  in  Liverpool  6s.  to  the  price  of  these  goods  to  make 
market  value,  and  since  they  came  here  such  has  been  the  rapidity  of  the 
advance  of  value  in  Liverpool  (which  we  have  heard  by  telegraph)  that  we 
have  added  2s.  more  to  the  value,  making  it  38s. ;  and  now  you  want  me  to 
swear  that  that  is  the  actual  cost  of  these  goods  I"  "  Oh,  Mr.  Dodge,"  said 
he,  "you  simply  swear  that  it  is  correct." 

Now,  sir,  without  swearing  in  Liverpool  to  the  invoices  in  the  form  made 
out  by  the  Treasury  Department  the  goods  could  not  be  shipped.  They 
would  have  to  lie  in  the  warehouse  ;  and  if  we  did  not  swear  in  New  York 
according  to  the  form  laid  down  in  the  Treasury  Department,  the  goods 
would  go  to  the  public  stores  and  lie  there  till  they  rotted.  But  it  is  under- 
stood by  merchants  that  the  intention  of  the  Custom  House  oath  is  simply 
that  the  thing  is  right.  If  you,  gentlemen,  suppose  that  in  the  Custom 
House  at  New  York,  when  a  man  comes  up  to  make  his  entry  he  goes  and 
stands  up  at  the  desk,  and  the  deputy  collector  reads  out  to  him  what  he 
solemnly  swears,  you  are  very  much  mistaken.  Perhaps  it  ought  to  be  so, 
but  it  has  not  been  so  for  three  quarters  of  a  century  ;  neither  do  I  believe 


AN  EXTRAORDINARY  HISTORY.  17 

that  it  is  so  in  any  of  the  large  importing  ports  of  the  country.  I  have  been 
at  tlic  Custom  House  many  and  many  a  day  with  half  a  dozen  invoices. 
The  Bible  standi  on  the  edge  of  the  desk,  just  like  that  (holding  up  a 
paper  to  the  Committee).  The  deputy  collector  says,  "  you  swear  to  these 
invoices,  Mr.  Dodge?"  "  Yes."  Well,  that  is  the  end  of  it.  And  I  say  to 
you,  gentlemen,  that  with  six  or  seven  great  steamships  arriving  in  a  single 
day,  and  with  every  merchant  hurrying  to  get  his  invoices  through  the 
Custom  House,  if  the  deputy  collector  stops  to  read  all  the  formal  matter  of 
an  oath  to  every  man  for  every  invoice,  you  would  require  a  Custom  House 
four  times  as  big  as  you  have  now,  and  twenty  times  as  many  deputy  col- 
lectors. I  do  not  say  that  the  custom  adopted  is  right,  but  that  is  the 
practice. 

I  will  now  go  back  and  say  something  to  you  about  these  terrible  in- 
voices, these  duplicate  invoices,  in  the  same  handwriting  (as  you  were  told 
yesterday)  of  the  man  who  made  out  the  original  in  Liverpool.  You  were 
told  that  these  were  duplicate  invoices  sent  to  Phelps,  Dodge  &  Co.,  to 
enable  them  the  more  easily  to  defraud  the  Government.  But,  Mr.  Chair- 
man, Phelps,  Dodge  &  Co.  cannot  go  into  the  market  of  Liverpool,  or  into  any 
other  market  in  the  world,  and  buy,  at  any  one  time,  ready  manufactured, 
one  eighth  part  of  the  tin  which  they  keep  actually  in  stock.  We  cannot 
go  into  Liverpool  and  buy  ten,  twenty,  thirty,  forty,  or  fifty  thousand  boxes 
of  tin  and  ship  them  in  a  week.  We  make  our  contracts  with  ten,  twenty, 
thirty  or  forty  large  manufacturers  of  tin  plate,  and  we  contract  to  take  so 
many  boxes  a  month,  for  the  year  round,  or  so  many  boxes  a  week.  In 
some  cases  we  fix  the  prices  on  the  1st  of  January  that  shall  govern  the 
rate  during  the  year.  In  other  cases  we  make  a  contract,  and  the  price  is 
to  be  fixed  at  quarter  day.  The  manufacturers  will  ship  us  the  tin  all  along, 
and  when  quarter  day  comes  the  price  is  fixed.  A  few  years  ago  all  the 
tin  plate  that  was  manufactured  was  but  a  little  larger  than  this  sheet  of 
paper.  In  process  of  time  the  size  was  doubled.  First  the  size  was  10  by 
14  ;  then  it  was  increased  to  14  by  20  ;  then  came  20  by  28  ;  and  so  the 
different  sizes  and  th.e  different  thicknesses  have  all  gone  on  increasing. 
When  the  law  was  passed  under  which  most  of  these  regulations  were 
made  (the  law  of  1799)  five  hundred  boxes  of  tin  plate  a  year  would 
cover  all  the  importations  into  all  ports  of  the  United  States.  There  are 
now  imported  between  one  and  a  half  and  two  million  boxes  annually,  and 
it  enters  into  all  the  varieties  of  domestic  and  manufacturing  goods  used  all 
over  the  United  States.  We  now  import  tin  plate  as  large  as  the  width  of 
this  table,  20  to  30  inches  wide,  for  the  purpose  of  supplying  the  immense 
cheese  establishments  throughout  the  country.  They  want  it  to  line  their 
vats,  so  as  to  have  no  break  in  them.     There  are  no  regular  manufacturers 


18  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

of  these  tins  ;  tliey  are  not  nierclinntable  sizes,  like  X,  XX,  XXX,  and 
XXXX,  each  X  rcpresentir.g  28  pounds  additional  weight  ;  and  when  the 
price  of  "I  C  "  tin  is  given  it  governs  tlie  price  of  all  the  others.  All 
these  immense  sizes  are  made  to  order.  There  has  sprung  u.p  in  this 
country  within  the  last  few  years  an  enormous  manufacture  of  tin  vessels 
that  are  stamped  ;  large  tin  pails,  holding  tiiree,  or  four,  or  five  gallons, 
with  not  a  seam  in  them,  and  pans  of  all  sizes,  all  made  by  taking  these 
large  sheets  of  tin,  and,  with  a  heavy  press,  dropping  on  them  until  they 
rise  up  into  shape.  These  manufacturers  must  have  tin  plates  of  particular 
sizes  to  meet  their  particular  orders  ;  and  when  we  make  a  contract  with  a 
manufacturer  in  England,  running  for  six  or  twelve  months,  we  also  make 
contracts  with  nianufacturers  in  Chicago,  Thiladelphia,  Pittsburg,  and  all 
over  this  country,  to  furnish  them  with  a  certain  number  of  boxes  of  tin  per 
month,  of  all  the  i)articular  sizes  they  want,  so  that  they  will  be  sure  to 
have  the  sizes  that  are  necessary  to  make  the  assortment  of  goods  that  they 
have  to  sell  to  their  customers.  AVe  make  our  contracts  with  them  for  so 
many  boxes  a  month,  at  a  fixed  price,  or  at  a  price  predicated  upon  the 
price  in  Liverpool  at  the  time  of  shipment,  or  at  the  price  in  New  York  at 
the  time  of  arrival.  Kow,  when  we  make  a  contract  in  England  for  ten, 
twenty,  or  thirty  thousand  boxes  of  ordinary  sizes,  we  give  at  the  same 
time  an  order  for  one,  two,  or  three  thousand  boxes  of  extra  sizes.  The 
manufacturers  do  not  like  to  make  them.  Englishmen  do  not  like  to  be 
thrown  outof  their  usual  mode  of  doing  business;  but  they  will  make  so  many 
boxes  of  extra  size  to  so  many  other  boxes  of  the  regular  size  ;  and  when 
they  ship  along  one  or  two  thousand  boxes  of  the  regular  size,  they  will 
also  send  twenty  or  thirty  boxes  of  these  extra  sizes.  They  come  along  in 
driblets,  and  are  for  particular  orders. 

Now,  in  the  hurry  of  doing  business  in  Liverpool,  with  two  or  three 
steamers  leaving  in  a  day  (and  for  the  last  five  years  most  all  our  ship- 
ments have  been  by  steamer),  things  have  to  be  done  very  hurriedi}^  These 
ships  clear  in  the  afternoon,  and,  by  a  regulation  of  the  Consul,  every 
invoice  must  be  at  the  Consul's  office  and  sworn  to  by  1  o'clock.  He  will 
not  receive  them  afterward,  and  the  steamers  cannot  sail  unless  they  have 
the  bills  of  lading.  There  have  to  be  four  bills  of  lading  and  three  invoices 
made  out  in  a  hurry,  and  there  is  a  large  amount  of  writing  to  be  done. 
Now,  in  the  exigencies  of  getting  these  off,  our  firm  in  Liverpool  has  been 
in  the  habit  of  sending  these  papers  (showing  to  the  Committee  a  press 
copy  of  the  manufacturers'  bills  without  the  heading),  and  these  are  not  in 
any  sense  or  in  any  shape  duplicate  iLvoices.  I  defy  that  man  Jayne  to 
show  one,  and  I  defy  the  Government  to  show  one.  These  papers,  as  I 
say,  being  press  copies  of  the  bills  sent  by  the  manufacturers  to  Phelps, 


AN  EXTRAORDINARY  HISTORY.  19 

James  &  Co.,  arc  frequently,  in  the  luirry  of  business,  sent  on  to  us,  so 
that  we  may  know  what  goods  of  that  manufacturer  are  included  in  the 
invoice.  This  is  not  a  copy  of  the  invoice;  it  is  simply  a  bill  from  the 
manufacturers  to  Phelps,  James  &  Co.  Any  one  of  these  bills  may  relate 
to  five  or  six  articles.  This  invoice  (holding  one  up)  relates  to  three  articles. 
And  what  is  it  for?  simply  to  say  that  in  this  invoice  there  are  some  goods 

coming  out  marked  "<f  /  0."     These  particular  goods  probably  were  to  go 

to  Chicago,  or  to  Cincinnati,  or  to  Saint  Louis,  or  to  Pittsburgh.  They  come 
in  very  large  and  cumbersome  boxes,  which  we  would  not  want  to  have 
•carried  from  the  ship  up  to  our  store  and  then  to  the  place  from  which 
they  are  to  be  forwarded  to  their  destination.  But  our  young  man  who 
attends  to  the  shipping  is  able  in  this  way  to  know  what  goods  are  to  go 
to  a  particular  place,  so  that  he  can  have  them  taken  from  the  ship  and 
put  on  board  of  the  boat  or  railroaa,  that  they  may  go  off  directly.  Instead 
of  being  secret  invoices  designed  to  cheat  and  defraud  the  Government, 
these  press  copies  were  taken  and  pasted  directly  on  the  invoice  book,  so 
that  everybody  might  see  them,  and  that  when  the  shipping  clerk  came  he 
might  know  what  goods  were  to  go  somewhere  else  instead  of  being  carried 
to  the  store.  The  Committee  will  notice  this  breach  in  the  top  of  the 
paper  (exhibiting  it  to  the  Committee),  where  the  clerk,  who  subsequently 
became  the  informer,  tore  it  off  the  invoice  book.  In  this  particular  invoice 
to  which  the  press  copy  refers  there  are  ten  boxes  Qd.  below  cost,  fifteen 
boxes  Is.  Gd.  below  cost,  the  whole  making  a  difference  of  four  pounds  odd, 
which  will  make  a  difference  iu  duty  of  about  five  dollars. 

Mr.  Wood. — What  is  the  amount  of  the  invoice  ? 

Mr.  Dodge. — The  amount  of  the  entire  invoice  is  i£5,114,  or  about  $22,000, 
and  the  value  of  these  particular  articles  is  i£223. 

I  desire  to  make  an  additional  remark  in  reference  to  these  press  copies 
of  the  manufacturers'  bills.  In  some  cases,  instead  of  having  them  copied 
in  that  way,  the  same  young  man  who  made  out  the  invoices,  made  a  copy 
of  these  manufacturers'  bills  in  his  own  handwriting,  and  sent  them  on  ; 
but  in  every  case  they  were  put  on  the  invoice  books,  where  everybody 
could  see  them.  The  way  the  mistake  occurred  in  the  invoice  was  as  fol- 
lows :  These  very  large  tins  are  purchased  from  the  manufacturers  by  the 
ton,  and  they  are  converted  into  boxes  of  112  pounds  or  224  pounds,  and 
it  is  in  making  the  calculation  from  the  ton  to  the  box  that  the  mistake 
was  made.  It  was  in  the  hurry  of  computation,  and  in  the  pressure  for 
time.  In  this  other  invoice,  which  1  happened  to  take  up,  I  find  that  the 
actual  amount  of  the  bills,  as  they  came  from  the  manufacturers,  was  i2270 
12s.  2d.,  while  the  invoice  was  £271  18s. 

Mr.  Beck. — So  that  mistakes  occurred  on  both  sides. 


20  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Dodge. — Yes,  sir  ;  clerks  are  not  immaculate,  and  they  will  make  mis- 
takes sometime.*.  We  have  recently  made  in  an  entry  of  £1,234  4s.  Zd.  a 
slight  mistake,  and  according  to  the  construction  of  the  law,  as  given  before 
you  yesterday,  the  whole  invoice  may  be  forfeited.  AVe  have  made  the  entry 
within  a  week  past.  The  mistake  in  this  instance  is,  that  on  the  side  of 
the  bill  of  lading  there  was  a  charge  of  £1  Ss.  2d.,  which  was  not  added  to 
the  invoice.  There  were  several  charges,  amounting  in  all  to  £44  Is.  5d. 
But  it  seems  that  this  cliarge  of  £1  3s.  2d.,  which  should  have  been  added 
to  our  invoice,  was  overlooked  by  some  negligence.  Let  the  special  agent 
of  the  Treasury  take  notice  of  that,  because  that  whole  entry  is  liable  on 
account  of  that  mistake  to  be  confiscated  to  the  Government,  according  to 
his  practice. 

I  wish  to  call  the  attention  of  the  Committee  to  the  fact  that  this  dis- 
missed clerk  of  ours,  when  he  found  in  his  own  conscience,  and  knew  per- 
fectly well  that  his  iniquity  would  probably  find  him  out,  and  t'hat  he 
would  be  dismissed  from  our  employment  on  account  of  his  complication  in 
other  matters,  to  which  I  will  not  refer  now  (but  which  were  also  connected 
with  this  matter  indirectly),  went  to  work  to  see  how  he  could  better  him- 
self if  he  was  turned  out.  A  good  deal  has  been  said  about  the  fact  that 
this  man  stood  high  in  position  in  the  store  of  Phelps,  Dodge  &  Co.  This 
highminded,  conscientious  young  man,  who  felt  that  he  could  not  be  guilty 
of  standing  there  and  copying  on  our  invoice  books  the  evidence  of  the. 
guilt  of  Phelps,  Dodge  &  Co.  (that  he  could  not  satisfy  his  conscience  to 
do  such  a  thing),  goes  to  work  and  deliberately  takes  from  our  invoice 
books,  for  a  year  or  two,  every  single  one  of  these  papers  (holding  up  a 
letter  press  copy  of  the  manufacturers'  bills),  wherever  there  was  evidence 
that  the  goods  had  cost  Gd.  or  Is.  more  than  happened  at  the  time  to  be 
put  into  the  invoices,  and  these  he  preserved  very  carefully.  He  then  went 
to  work  and  tore  off  a  good  many  more  than  he  had  torn  off  before,  which 
contained  the  fact  that  the  goods  were  invoiced  at  much  more  tlian  they 
cost.  These  he  destroyed,  I  suppose.  We  never  have  seen  them  since. 
They  were  torn  off  our  books  and  are  gone. 

Now,  gentlemen,  after  all  this  thing  had  gone  on  to  this  extent,  we  were 
met  with  a  proposition  that  the  thing  had  better  be  compromised.  It  was 
a  terrible  thing.  1  had  made  an  offer  that  if  they  would  look  over  the 
invoices,  and  itemize  the  undervaluations,  we  would  give  a  check  for  the 
amount,  and  it  was  agreed  to  by  the  officials  at  New  York,  under  the 
advice  of  Mr.  Jayne.  They  were  in  conclave  there,  with  the  counsel  of  the 
special  agent.  He  wishes  to  have  good  counsel,  and  so  he  secures  the 
eminent  member  of  the  House  of  Representatives  who  occupies  so  high  a 
position  now.     He  was  in  New  York  all  that  time.     If  he  was  not  he  was 


AN  EXTRAORDINARY  HISTORY.  21 

sent  for  every  day  or  two.  Tliis  dii^cliarged  clerk  liad  made  a  bargain 
with  the  informer  to  get  his  share.  We  understand  that  the  hiw  author- 
izes the  appointment  of  a  special  agent,  wn.l  fixes  a  sahiry  for  him  for  doing 
this  business,  and  tliat,  when  the  information  conies,  the  informer  is  en- 
titled to  the  share  prescribed  by  law.  But  instead  of  this,  in  all  these 
cases  the  special  agent  makes  a  bargain  with  the  informer,  and  he  himself 
jecomes  the  informer,  whik*  tlie  other  man  steps  back.  What  the  bargain 
was  with  our  cU'rk  about  dividing  the  spoils  we  do  not  know.  Wc  saw- 
such  an  array  of  lawyers,  and  it  was  so  imi>ressed  on  us  that  our  case  was 
a  tremendous  one,  a  dreadful  one,  and  that  the  goods  were  clearly  and 
decidedly  forfeited  to  the  Government,  that  we  finally  agreed  to  the  settle- 
ment ;  and  they  went  over  the  invoices  and  told  us  that  the  amount  we 
were  to  pay  was  $260,000.  It  was  about  the  20th  of  December  that  we 
had  our  first  interview  with  Jayne,  and  it  was  perhaps  a  week  afterward 
(though  the  days  appeared  months  as  they  passed)  when  we  were  told 
they  had  ascertained  the  amount — not  the  amount  of  duty  that  was  due, 
but  the  gross  amount  of  the  items  which  went  to  make  up  the  undervalued 
goods,  and  they  said  that  it  would  amount  to  $£-30,000.  We  gave  a  check 
for  the  $260,000.  The  next  day  it  was  all  paraded  in  the  j)apers.  The 
whole  terrific  thing  came  out.  Before  that  it  was  all  kept  quiet.  But  the 
money  vvas  paid  and  wer.t  into  court,  and  then  out  the  whole  thing  came, 
and  what  followed  you  gentlemen  know.  After  a  few  days  there  was  u 
change  in  the  district  attorney,  and  the  business  lingered  along  until  finally 
we  were  informed  that  by  a  more  careful  investigation  of  the  whole  matter, 
they  found  $271,017.38  as  the  total  amount  of  the  portions  of  the  invoices 
said  to  be  undervalued.  We  subsequently  learned  that  the  amount  of  the 
undervaluation  for  five  years  was  $6,558,  and  the  difference  in  duty  to  the 
Government  $1,658.78.  We  did  not  know  it  till  after  we  got  this  official 
document  (the  letter  of  United  States  District  Attorney  Bliss).  If  we  had 
known  it  we  never  should  have  paid  the  money. 

And  now,  before  I  forget  it,  I  want  to  do  justice  to  a  Government  officer 
who,  I  think,  is  entitled  to  have  justice  done  him  in  this  case.  I  have 
regretted  very  much  that,  from  time  to  time,  ever  since  the  settlement, 
there  have  appeared  in  the  papers  certain  hints  which  would  seem  to 
indicate  that  the  Secretary  of  the  Treasury  (Mr.  Boutwell)  did  not  treat  us 
fairly  in  the  matter.  If  we  had  followed  Mr.  Boutwcll's  advice  we  probably 
never  should  have  paid  this  $271,000.  I  came  on  to  see  Mr.  Boutwell.  He 
was  sick  at  his  house,  and  was  kind  enough  to  receive  me  in  his  room.  I 
stated  the  whole  case  to  him,  as  well  as  I  could,  in  a  very  short  tinie,  and  I 
told  Mr.  Boutwell  that  we  had  looked  this  matter  over  with  great  care  ;  that 
if  it  w^as  a  matter  between   ourselves  and  the  Government,  or  if  it  was 


22  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

pimply  a  mnttrr  between  tlic  courts  of  tlie  United  States  nnd  ourselves,  nnd 
if  it  were  not  for  tlie  nrray  of  ])owcr  and  influence  which  was  behind  to 
make  the  better  appear  the  worse,  we  would  not  hesitate  to  go  into  e-mrt; 
but  for  us  to  pro  into  court  and  Imve  a  judgment  against  ns  for  $1,750,000, 
and  to  have  it  telegraplied  all  over  the  world  that  tbe  Government  of  the 
United  States  had  sued  Phelps,  Dodge  &  Co.  for  fraud,  and  had  obtained  a 
judgnrent  for  that  amount,  whatever  might  be  the  result  afterward,  the 
injury  to  us  as  merchants  would  have  been  irreparable.  Because,  liowever 
swift  the  fact  may  go  by  telegraph,  the  result  of  an  after  investigation 
would  be  very  slow  to  follow.  Mr.  Boutwell  said  to  me,  "Mr.  Dodge,  I 
think  you  had  better  go  before  the  court,  and  I  will  assure  you  that  if  it 
comes  back  to  me,  as  it  will  come,  whatever  may  be  the  decision  of  the 
court,  1  will  give  the  matter  personal  and  careful  consideration."  I  thanked 
liim  for  it.  lie  knew  then,  probably,  what  I  did  not  know,  but  which,  if  I 
had  known,  I  never  would  have  paid  the  money.  T  had  no  knowledge  that 
there  was  only  sixteen  hundred  dollars  involved  in  the  whole  case,  running 
over  five  years,  and  covering  importations  to  the  amount  of  $50,000,000. 
I  am  not  so  big  a  fool  as  that  ;  but  the  fact  was  kept  from  us,  and  kept 
from  us  purposely.  T  had  no  idea  of  it.  I  went  back  to  New  York  and 
consulted  my  partners,  and  I  wrote  a  letter  to  Mr.  Boutwell,  which  you  will 
see  in  this  correspondence.  Subsequently,  however,  when  we  saw  the  in- 
fluence that  might  be  thrown  around  this  matter,  the  enormous  sum  of 
money  depending  upon  it,  and  when  we  thought  of  the  fact  that  it  might 
go  into  court  and  a  judgment  for  $1,750,000  obtained  against  us  (for  the 
lawyers  said  that  under  the  law  of  1863  the  whole  invoice  was  forfeited), 
we  renewed  the  offer.  General  Butler  stated  that  he  had  a  letter  from 
Phelps,  Dodge  &  Co.,  and  all  that  he  wanted  was  the  production  of  that 
letter  to  convict  them  in  any  District  Court  of  the  United  States.  What 
that  letter  could  be  we  had  no  idea  ;  but  at  last  we  got  hold  of  it  when  the 
business  was  settled,  and  as  we  read  it  we  laughed.  The  case  was  just 
this  :  When  we  imported  the  first  of  these  very  large  sheets  of  tin  plate 
for  these  cheese  vats,  in  order  to  avoid  the  expense  and  trouble  of  putting 
them  into  boxes,  we  imported  them  in  bundles,  and  put  around  the 
bundles  a  strip  of  galvanized  iron,  and  sent  them  in  that  way.  The  ap- 
praiser said,  "  Now,  this  is  tin  ;  this  is  nothing  but  tin  plate  ;  but  we  never 
had  tin  plate  come  except  in  boxes,  and  now,  to  avoid  any  trouble,  you  had 
better  write  to  your  folks  to  have  this  tin  put  up  in  boxes  of  200  pounds' 
weight,  and  mark  on  the  outside  of  the  boxes  the  weight  and  the  name  of 
the  manufacturer,  and  then  there  can  be  no  question  in  the  matter."  We 
wrote  to  our  house  in  Liverpool,  "  The  Custom  House  objects  to  yoursending 
out  these  large  sheets  loose  and  not  in  boxes,  and  they  require  that  the  tin 


AN  EXTRAORDINARY  HISTORY.  23 

sliall  be  put  up  in  boxes  of  224  pounds,  or  whatever  sizes  tliey  may  be 
conveniently  put  in,  and  that  the  exact  weight  and  the  name  of  the  manu- 
facturer shall  be  printed  on  the  outside,  as  in  the  case  of  other  sized  tin  ; 
and  we  want  you  to  be  very  particular  to  see  to  that,  and  not  let  any  more 
of  the  large  tin  come  out  except  in  boxes."  To  that  the}^  replied,  "  We 
have  received  your  letter  in  regard  to  large  tin,  and  see  that  you  have  dif- 
ficolty  with  your  Custom  House  about  it.  We  will  endeavor  to  follow  out 
your  instructions  carefully  ;  but  if,  in  any  respect,  we  differ,  let  us  know, 
and  we  will  fix  it."  Ah,  Mr.  Butler  had  caught  us  now!  You  have  trouble 
with  the  Custom  House  about  the  large  sheets  of  tin  plate,  and  we  have 
your  special  instructions  what  to  do  ;  and  if  not  right,  "we  will  fix  it." 
That,  thought,  Mr.  Butler,  will  convict  you  before  any  court  of  the  United 
States ! 

Now,  gentlemen,  when  I  came  back  from  Washington  my  partners  and 
myself  consulted  very  carefully  over  this  matter,  and  we  decided  that  we 
had  better  pay  the  money  than  to  have  a  judgment  against  us  of  $1,750,000, 
and  to  have  that  heralded  over  the  world,  and  to  run  the  risk  of  having 
these  men  using  what  influence  they  could  to  secure  the  perpetuity  of  that 
judgment,  because,  instead  of  their  receiving  $30,000  each  as  their  share  of 
the  moiety  of  the  $271,000,  they  would  have  received  each  of  them  over 
$100,000,  and  that  was  worth  working  for.  And  then  there  was  another 
difficulty  which  stood  right  in  our  face.  The  question  of  Mr.  Boutwell's 
being  returned  from  Massachusetts  to  the  Senate  of  the  United  States  was 
then  just  on  the  eve  of  being  decided,  and  in  a  f(')rtnight  afterwards, 
on  the  I2th  March  Cthis  was  on  the  22d  February)  Mr.  Boutwell  was 
elected  to  the  United  States  Senate.  We  said  to  ourselves,  "  We  do  not 
know  who  is  to  be  Secretary  of  the  Treasury,  by  whom  this  thing  is  to  be 
settled,"  and  we  came  to  the  conclusion  to  renew  our  offer.  We  made  our 
offer,  and  we  settled,  and  we  paid  the  money.  We  paid  the  money  to  get 
rid  of  this  enormous  charge  against  us,  rather  than  subject  ourselves  to  a 
forfeiture  of  $1,750,000. 

We  paid  the  money  in  ignorance  of  the  fact  of  the  amount  we 
owed  to  the  Government.  We  never  had  a  bill  of  specifications  ;  we  have 
not  got  one  to-day  ;  we  have  got  simply  the  list  of  the  vessels  on  which  the 
goods  were  imported.  We  settled,  and  this  has  become  the  biggest  case  on 
record.  It  is  known  the  world  over.  We  look  back  upon  it,  and  we  think 
as  you  gentlemen  think,  no  doubt,  that  we  were  fools  We  were  fools, 
but  there  was  terror  in  all  these  things  ;  there  was  terror  in  that  first  day 
when  we  W(^nt  into  that  dark  hole  in  the  Custom  House  ;  there  was  terror 
throughout  ;  and  this  reminds  me  of  another  thing  which  will  show  the 
workings  of  this  law,  because  these  gentlemen  do  not  do  anything  except 


24  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

within  the  law.  I  suppose  the  detective  has  the  right  to  use  any  sort  of 
means  he  pleases,  no  matter  what  becomes  of  one's  feelings,  no  matter  for 
the  feelings  of  families,  wives  and  children.  This  man  spoke  to  you  yester- 
day about  his  heart-broken  wife.  It  seems  that  he  knows  something  about 
these  feelings.  But  there  happens  to  be  seven  of  us  who  have  wives  and 
children,  and  who  had  a  reputation  that  had  been  growing  up  a  great  many 
years.  We  found  ourselves  dogged  by  spies  every  step  that  we  took.  We 
could  not  have  a  meeting  of  our  partners  in  one  of  our  dwellings  at  night 
without  its  being  known  in  that  dark  hole  next  morning  ;  we  could  not  do 
a  thing  in  our  store  without  its  being  known  ;  we  could  not  have  our  part- 
ners or  our  lawyers  in  our  private  office  without  its  being  known.  I  will 
relate  an  instance  of  this.  My  partner,  older  than  myself  (and  a  more 
honorable  man  does  not  live  on  the  face  of  the  earth  than  Mr.  James  Stokes, 
of  New  York),  has  been  in  the  habit  for  twenty  years,  as  January  came 
around,  of  opening  his  desk  and  clearing  it  out  some  rainy  day  of  the 
accumulation  of  papers  which  it  contained,  throwing  them  on  the  floor  and 
having  a  boy  put  them  in  the  fire  and  burn  them.  lie  did  so  on  the  8th  or 
lOth  of  January,  and  within  half  an  hour  we  received  a  letter  from  our  at- 
torney to  come  directly  to  his  office.  We  went  up  there,  and  he  said  : 
*'  What  in  the  world  is  the  matter  ?  Jayne  is  tearing  about  in  a  most 
terrible  way.  He  says  that  Phelps,  Dodge  &  Co.  are  burning  their  papers, 
and  that  he  will  have  every  soul  of  them  in  Ludlow  street  jail  before  night." 
How  did  he  know  it?  How  did  he  know  that  these  papers  were  burned 
up  ?  Because  he  paid  a  man  in  our  store  to  give  information.  He  had  our 
second  book-keeper  in  his  employment.  What  he  paid  him  I  do  not  know  ; 
but  that  he  was  in  his  employment  I  do  know.  We  traced  that  fellow  and 
turned  him  out  of  our  store.  And  where  did  he  go  when  he  was  turned 
out?  where  should  he  go  ?  He  went  where  he  was  employed.  And  where 
is  he  to-day  ?  He  is  a  clerk  in  the  post-office,  in  the  money  department — a 
place  obtained  for  him  by  the  special  agent  of  the  United  States. 

Mr.  Beck. — What  is  his  name  ? 

Mr.  Dodge. — His  name  is  Kennedy.  But  I  will  not  detain  the  Committee 
longer  with  this  matter. 

Mr.  NiBLACK. — It  is  very  interesting  to  me. 

Mr.  Dodge. — This  is  the  operation  of  the  whole  thing  from  beginning  to 
end.  At  my  age,  having  been  a  merchant  fifty  years,  I  desired  to  die  in 
peace,  and  when  I  paid  this  money  I  wanted  that  to  be  the  end  of  it.  But 
it  is  paraded  from  Dan  to  Boersheba  now  because  other  people  have  been 
touched.  So  sensitive  was  I  about  this  that  when  my  friend,  Mr.  Schultz, 
came  to  me  about  another  case  and  said  that  they  were  going  to  have  an 
extra  meeting  of  the  Chamber  of  Commerce  on  the  subject,  I  said  :  "  It  is 


AN  EXTRAORDINARY  HISTORY.  25 

not  a  case  of  mine,  and  I  will  not  be  there,  you  must  get  somebody  else  to 
preside."  But,  notwithstanding,  our  case  is  held  up  everywhere — for 
what?  To  vindicate  these  laws  and  to  show  the  propriety  of  having  men 
to  watch  these  "infernal  merchants."  We  admit  that  we  undervalued 
our  goods  by  mistake,  by  the  difficulty  of  ascertaining  the  exact  market 
value  of  these  extra  goods  at  the  time  of  shipment,  the  value  being  gov- 
erned by  the  general  value  of  the  goods  in  the  main  line  of  the  invoice.  In 
some  instances  we  did  send  out  some  of  these  invoices  at  6d.  or  !.<?.,  or  Is. 
Qd.  ;  and,  I  believe,  in  one  case  at  4s.,  on  a  few  boxes,  difference  from  the 
prices  we  paid  for  them  six  months  before.  But  we  did  not  hide  it.  We 
put  it  directly  on  our  invoice  book,  where  everybody  could  see  it.  You 
recollect,  gentlemen,  that  was  a  year  of  the  most  wonderful  fluctuation  in 
the  price  of  metals  ever  known.  The  strikes  in  England,  the  rise  in  coal, 
the  enormous  rise  in  iron  and  tin,  made  the  year  remarkable,  so  that  in 
the  month  of  January,  1872,  we  paid  28s.  for  tin  plate  ;  in  the  month  of 
July  44.S'.  for  the  same  tin,  and  in  the  month  of  December  35s.  To  show 
the  wonderful  changes  in  the  price  of  metal  that  year  I  will  state  this  fact : 
I  passed  through  Liverpool  in  the  early  part  of  the  year  on  my  way  to  the 
East  ;  I  saw  all  the  indications  of  a  great  advance  in  price,  and,  on  con- 
sulting my  partner,  we  bought  several  hundred  thousand  boxes  of  tin 
plate  for  future  delivery.  That  is  what  merchants  do  who  think  they  have 
got  a  prophetic  view  of  things.  At  the  same  time  I  went  into  market 
and  bought  seventeen  thousand  tons  of  railroad  iron  for  a  company  of 
which  I  was  president,  although  1  knew  we  should  not  want  it  for  eighteen 
months  or  two  years  But  I  bought  it  at  £1  lOs.  and  at  £1  7s.  Qd.,  from 
two  or  three  different  manufacturers.  I  passed  on  and  went  to  the  East, 
and  returned  in  about  eight  months,  and  when  I  came  back  that  same  iron 
was  selling  at  £\l  10s. 

Now,  gentlemen,  I  have  just  told  you  that  we  bought  very  largely  of 
tin  phiie  at  lower  prices  than  it  was  sold  for  afterward  ;  and  I  have  shown 
that,  with  a  double  pair  of  spectacles  and  with  the  help  of  our  demoral- 
ized clerk,  the  special  agent  of  the  Government  went  carefully  over  our 
invoices  for  five  years.  Before  Mr.  Banfield  would  agree  to  the  settle- 
ment he  wrote  to  Mr.  Jayne  to  ascertain  exactly  what  he  had  done, 
and  what  examination  he  had  made  into  the  affairs  of  Phelps,  Dodge  & 
Co.  Under  date  of  February  24,  1873,  Mr.  Jayne  replies  to  that  letter  as 
follows  : 

"In  reply  to  your  letter  of  the  22d,  making  inquiry  in  relation  to  what  was  covered  by 
my  report  in  the  case  of  Plielps,  Dodge  &  Co.,  I  would  say  that  my  investigation  covered  all 
the  importations  of  that  house  for  the  five  years  next  preceding  January  1,  1873,  and  that 


26  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

the  matters  called  to  the  attention  of  the  Government  relate  to  undervaluation  of  merchan- 
dise, as  well  as  to  suspected  payments  of  money  for  damage  allowances,  during  that 
period."* 

I  had  forgotten  that  that  last  intimation  was  in  that  letter,  and  I  should 
like  to  explain  it.  We  were  accused  of  using  undue  influence,  and  of  pay- 
ing money  to  an  appraiser  of  the  Government  for  the  purpose  of  securing 
from  him  a  very  large  appraisement  for  damages  on  a  cargo  of  Russia 
sheet  iron  ;  and  we  were  told  by  the  special  agent,  or  it  was  told  to  our 
attorney,  that  he  had  proof  of  that  fact,  and  we  got  him  to  name  the  ship 
in  which  the  damaged  iron  had  been  imported.  We  first  got  him  to  fix 
the  date  when  we  paid  the  money,  or  when  he  said  we  had  paid  it  (and 
which  we  had  never  done),  to  induce  the  appraiser  to  give  us  a  large  per- 
centage on  the  Russian  iron  The  Committee  know  that  the  beauty  and 
value  of  Russian  iron  consists  in  its  polish,  and  if  it  gets  blemished  or 
rusted,  it  is  not  worth  any  more  than  common  iron.  We  had  a  large  de- 
duction made  in  this  ca^e,  but  not  more  than  we  should  have  had.  We 
found  out  why  it  was  said  that  we  had  paid  this  money.  It  was  because 
the  clerk  said  he  found  a  check  upon  our  book  somewhere  for  a  thousand 
dollars,  and  he  believed  (although  there  was  nothing  to  indicate  it)  that 
that  check  was  drawn  in  favor  of  some  agent  of  the  Government.  But  we 
got  the  name  of  the  ship  on  which  the  iron  was  imported,  and  on  which 
this  tremendous  allowance  was  made  for  damages,  and  we  found  that  the 
ship  sailed  from  St.  Petersburg  six  months  after  the  date  when  he  said  the 
money  was  paid. 

Now,  Mr.  Jayne  says  he  went  carefully  over  all  our  invoices  for  five 
years,  and  that  he  found  $6,658  of  undervalued  goods,  and  that  the  duty 
on  these  undervalued  goods,  at  25  per  cent.,  would  have  amounted  to 
$1,664.68.  But  he  did  not  say  that  he  found  anything  else  ;  he  did  not 
say  that  he  found  anything  to  mitigate  that.  Now,  I  want  to  say  to  this 
Committee,  that  our  books  show,  and  I  can  prove  it  (here  is  the  whole 
collated  evidence  of  it),  that  we  paid  on  one  single  contract  that  year,  to 
the  Government  of  the  United  States,  through  our  own  overvaluations  of 

♦  What  these  investigations,  covering  a  period  of  five  years,  and  made  by  Jayne  with  free 
use  and  control  of  all  the  books  of  Phelps,  Dodge  &  Co.,  and  assisted  by  one  or  more  of  the 
dishonest  and  discharged  clerks  of  the  firm,  amounted  to,  is  conclusively  shown  by  the  fol- 
lowing extract  of  a  report  on  the  subject  made  by  Geo.  Bliss,  U.  S.  District  Attorney,  to 
E,  C.  Bantield,  Solicitor  of  the  Treasury,  under  date  of  January  2d,  1874: 

"  There  is  no  aotual  evidenoo  of  any  fraud  prior  to  January,  1871.  The  books  neither  before  nor  since 
contain  any  evidence  of  fraud,  but  it  is  found  in  the  memoranda  already  referred  to  and  in  duplicate  (true) 
invoices.  Of  invoices  entered  since  early  in  1871.  whicli  are  tainted  with  fraud,  the  total  value  is 
$1,72<>,0()0.  The  items  in  these  invoices  in  which  undervaluations  occur  amount  to  S271.017  23,  while  the 
amount  of  undervaluation  is  S6,658  78.  The  total  amount  of  duties  lost  to  the  Government  was  $1,684  68. 
The  total  importations  of  the  defendants  are  about  $6,000,000  a  year." 


AN  EXTRAORDINARY  HISTORY.  27 

goods  over  the  price  that  we  paid  the  manufacturers  for  them,  $58,000  more 
than  we  would  ha\e  been  obliged  to  pay  had  the  articles  in  question  been  as- 
sessed, with  duties  on  their  original  cost;  and  that  during  that  year  our  total 
importations  amounted  to  $8,500,000.  We  voluntarily  added  to  the  invoices 
of  the  goods  which  were  sent  from  Liverpool  $260,000  odd  in  that  year  to 
the  cost  of  our  tin,  on  which  overvaluation  we  paid  the  Government  25  per 
cent,  duties. 

Now,  gentlemen,  if  you  can  suppose  for  one  moment  that  Phelps,  Dodge 
&  Co.  deliberately,  systematically,  intentionally  started  to  defraud  the  Gov- 
ernment of  the  United  States  out  of  the  paltry  sum  of  $1,600  by  undervalu- 
ations in  the  course  of  five  years  to  the  amount  of  $6,000,  when  upon  u 
single  contract  we  added  $58,000,  and  in  a.  single  year  $260,000  to  the  cost 
of  our  goods,  then  I  do  not  know  what  you  would  do  with  evidence. 

Gentlemen,  I  submit  this  case  to  you.  If  I  were  to  go  on  further  I 
should  probably  occupy  much  more  of  your  time,  and  perhaps  I  have 
already  occupied  more  than  I  should  have  done,  but  this  matter  has  been 
on  my  heart  pretty  strongly  for  the  last  twelve  months. 

The  Committee  then  adjourned  till  half  past  seven  P.  M 


The  Committee  met  at  half  past  seven  P.  M. 

Mr.  Dodge  continued  liis  statement.  He  said:  Mr.  Chairman,  I  tres- 
passed so  long  upon  the  patience  of  the  Committee  this  morning  that 
although  I  have  many  things  I  .'^hould  like  to  refer  to,  I  propose  to  say 
but  a  very  few  words  additional,  and  then  give  phice  to  other  gentlemen. 

From  the  first  fall  of  the  thunderbolt  in  the  little  gas  lit  room  on  that  day 
to  which  I  have  referred,  up  to  the  present  time,  great  stress  has  been  laid 
on  the  assumption  that  no  one  for  a  moment  suspected  that  I,  as  senior 
member  of  the  firm,  had  any  knowledge  of  irregularities  in  our  office,  thus 
by  implication  placing  the  pretended  fraud  on  some  other  members  of  my 
firm.  But  whatever  responsibility  there  may  be  we  will  stand  or  fall  to- 
gether. 

We  are  all  one  family,  consisting  of  brothers-in-law  and  our  sons;  and  as 
parents  we  thank  God  that  none  of  our  sons  are  capable  of  attempting  to 
defraud  the  revenue.  They  are  all  independent  of  any  motive  to  such  an 
act;  and  the  three  seniors,  after  maintaining  an  honorable  position  until 
we  have  reached  nearly  three  score  and  ten,  with  God's  blessing  on  our 
honest  labor,  having  enough  without  stealing,  intend  to  go  down  to  our 
graves  leaving  our  children  the  inheritance  of  an  unspotted  reputation,  save 
that  stain  which  the  Government  has  attempted  to  inflict. 


28  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Cliairman,  I  would  like  to  pay  one  word  as  to  the  effect  of  this  sys- 
tem on  individuals  who  are  struck  (as  my  friend  Schultz  says).  I  only 
hesitate  for  fear  of  seeminp;  to  brin<?  personal  trials  before  the  public,  but  I 
can  in  no  other  way  so  well  illustrate  the  injustice  of  these  laws. 

My  partner,  Mr.  Daniel  James,  was  from  Central  New  York,  if  not  in  the 
district  of  your  member,  Mr.  Roberts,  yet  very  near;  the  son  of  an  early 
settler,  a  worthy  farmer;  when  a  boy  he  came  to  our  city,  obtained  a  situ- 
ation in  a  store,  was  faithful,  industrious  and  enterprising:.  This  secured 
for  him  in  few  years  the  position  of  a  partner;  soon  after  he  married  a 
daughter  of  Mr.  Phelps,  subsequently  joined  the  firm  and  removed  to  Liver- 
pool, where  for  over  forty  years  he  has  been  the  resident  partner,  sustain- 
ing the  character  of  a  high  minded,  respected  and  honorable  merchant,  and 
for  a  number  of  years  past  the  oldest  American  merchant  in  England;  his 
name  a  synonym  of  honesty  and  uprightness,  and  shedding  a  lustre  on  his 
own  country  and  American  merchants;  gratified  by  the  honors  conferred 
abroad,  but  ever  looking  with  pride  as  an  American  citizen  for  protection 
to  his  own  country.  In  all  this  time  not  a  question  had  ever  arisen  as  to 
the  vast  shipments  made  to  the  house  in  New  York.  On  entering  his  office 
one  day  in  December,  1872,  he  found  the  following  dispatch  in  leaded  lines 
in  the  newspapers: 

"  Phelps,  Dodge  &  Co.,  New  York. — This  great  firm  have  had  their  books  and  papers 
seized  by  the  United  States  for  alleged  frauds  on  the  revenue  to  the  amount  of  $1,750,000." 

I  will  not  attempt  to  describe  the  feelings  of  such  a  man.  I  will  simply 
say  that  the  shock  came  well  nigh  killing  him,  nor  has  he  ever  entirely  re- 
covered. He  felt  that  a  life  long  reputation,  dearer  to  him  than  aught  else, 
had  been  struck  down  in  a  moment  by  his  own  Government,  on  which  he 
had  depended  for  protection.  He  had  passed  his  three  score  and  ten,  until 
then  with  an  unblemished  character,  and  felt  that  at  least  he  had  a  right 
to  demand  that  he  should  be  "considered  innocent  till  proved  guilty.'* 
Can  a  law  liable  to  produce  such  results  be  just  ? 

I  would  like  to  say  one  word  with  reference  to  substituting  a  specific  in 
place  of  an  ad  valorem  duty  on  tin  plate.  It  is  the  general  feeling  of  the 
trade  that  such  a  modification  of  the  duty  is  entirely  practicable  and  desir- 
able. Very  careful  examinations  have  been  made  by  several  in  the  trade, 
going  over  the  last  three  or  four  years,  and  making  a  table  of  all  the  dif- 
ferent kinds  of  tin  imported  and  their  weights,  and  the  concluj^ion  is  that 
if  tin  plate  was  subjected  to  a  specific  duty  of  one  cent  a  pound,  including 
the  weight  of  boxes,  it  would  be  an  equivalent  of  the  present  ad  valorem 
duty  of  15  per  cent.,  probably  a  little  higher.  It  would  make  a  difference 
of  a  few  hundred  thousand  dollars  in  favor  of  the  Government  and  against 


AN  EXTRAORDINARY  HISTORY.  29 

the  manufacturers,  but  it  would  at  the  same  time  remove  the  great  diffi- 
culty that  is  constantly  arising  as  to  home  values. 

Referring  to  tlie  matter  of  our  clerk,  1  want  to  add  that  if  that  very  hon- 
est clerk,  who  was  referred  to  so  kindly  by  Jane,  had  apprised  any  member 
of  our  iirm  that  there  had  been  in  his  opinion  any  irregularity  in  the  man- 
ner of  shipping  the  tin  on  the  other  side,  we  would  have  availed  ourselves 
of  tiie  privilege  given  us  in  our  oath,  and  so  informed  the  Custom  House. 
This  is  what  he  ought  to  have  done  if  he  was  an  honest  young  man. 

And  now,  in  conclusion,  gentlemen,  I  would  say  with  all  frankness,  not  as 
one  suffering  from  a  sense  of  injury,  but  as  one  who  has  always  stood  by 
tlic  Government,  fulfilling  to  the  utmost  every  claim  incumbent  on  a  good 
citizen^  that  unless  something  is  done  to  reassure  the  confidence  of  the  im- 
porting merchants  very  soon,  they  cannot  be  expected  to  continue  their 
business.  A  very  few  years  of  the  present  system  of  Custom  House  busi- 
II (ss  will  suffice  10  drive  American  merchants  from  the  field  and  transfer 
the  importing  business  to  unnaturalized  foreigners,  who,  keeping  no  books 
in  this  country,  will,  after  making  t'heir  money,  return  home  to  spend  it. 
Then,  with  our  American  merchants  driven  from  commercial  pursuits,  we 
shall  present  to  the  world  the  sad  spectacle  of  a  great  country  without  a 
mercantile  marine,  its  commerce  handed  over  to  be  prosecuted  by 
-Hangers. 

Gentlemen  of  the  Committee,  I  trust  that  you  will  keep  clearly  in  your 
minds  that  the  Government  admits — 

1st.  That  the  total  amount  of  importations  by  Phelps,  Dodge  &  Co.,  in 
the  five  years  ended  31st  December,  1872,  was  $30,000,000. 

2d.  That  in  a  careful  examination  of  these  importations,  it  found  some 
articles  in  different  invoices  which  it  claimed  were  undervalued,  and  that 
the  total  amount  of  these  invoices  was  $1,750,000. 

3d.  That  the  total  amount  of  the  articles  claimed  to  be  undervalued  was 
$271,017  23. 

4th.  That  the  total  amount  of  the  undervaluation  claimed  was  $6,658  78. 

5th.  That  the  total  amount  of  duties  claimed  to  be  lost  was  $1,664  68. 

These  facts  do  not  furnish  the  least  evidence  of  intent  to  evade  the  cus- 
toms law,  especially  when  taken  in  connection  with  the  fact  that  in  one  of 
these  years  we  paid  duties  on  over  valuation  of  our  invoices  of  over  $260,- 
000  to  make  them  equal  to  market  value.  In  the  light  of  this  investigation 
we  claim  that  the  Government  cannot  have  lost  a  dollar  by  alleged  under- 
valuation, for  they  collected  the  same  duty  that  they  would  have  received 
if  the  goods  had  been  purchased  at  the  date  of  the  invoice,  viz.,  the  market 
value  at  the  date  of  shipment.  Our  error  was  in  entering  them  at  a  frac- 
tion less  than  contract  cost,  in  trying  to  meet  market  value,  and  that  only 


30  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

to  an  extent  so  small  compared  with  the  large  amount  invoiced  above  co?t 
as  to  preclude  all  idea  of  wrong  intent.- 

Any  law  that  could  be  construed  to  make  us  liable  to  the  confiscation  of 
entire  invoices  of  the  value  of  nearly  82,000,000,  and  compel  us  to  pay 
$271,000  for  fear  of  a  greater  danger  (even  though  in  the  light  of  present 
facts  we  admit  we  made  a  great  mistake),  should  not  be  permitted  to  re- 
main in  force. 

I  am  very  much  obliged  to  the  Committee  for  the  kindness  with  which 
they  have  listened  to  me. 

Mr.  Kasson. — I  wish  to  be  perfectly  clear  as  to  one  of  the  points  made 
by  you.  1  mean  what  is  known  as  the  owner's  oath,  made  at  Liverpool  bv 
somebody.     By  whom  in  the  case  referred  to  was  that  made? 

Mr.  Dodge. — By  Mr.  Rees,  the  English  partner  of  our  house.  The  houses 
are  identical  with  this  exception.  The  firm  of  Phelps,  James  &  Co.  consists 
of  all  the  American  partners,  together  with  the  English  members  there, 
and  while  we  have  an  interest  in  everything  tlierc,  they  have  no  interest  in 
anything  here. 

Mr.  Kasson. — Then  that  owner's  oath  called  only  for  the  actual  cost? 

Mr.  Dodge. — It  calls  for  cost,  while  the  consignee's  oath  is  for  value — for 
market  value. 

Mr.  Kasson. — There  was  exhibited  to  us  what  are  called  rightly  or 
wrongly  the  duplicate  invoices,  which  seem  to  have  been  detached.  Were 
those  duplicate  invoices  forwarded  to  you  subsequently  to  the  shipment 
or  at  the  time? 

Mr.  Dodge. — At  the  time,  always. 

Mr.  Kasson. — By  this  same  partner  of  your  house? 

Mr.  Dodge. — By  the  firm  of  Phelps,  James  &  Co.  The  business  letter  is 
generally  written  by  the  senior  partner,  Mv.  James,  while  the  active  busi- 
ness is  done  by  the  junior  partners. 

Mr.  Kasson. — This  certificate  of  the  Consul  speaks  of  the  alternative  of 
actual  cost  or  market  value.  Does  the  owner  or  shipper  himself  make  oath 
to  the  market  value  in  case  where  he  has  purchased  the  goods,  or  does  he 
simply  give  in  the  oath,  known  as  the  owner's  oath,  the  actual  cost  ? 

Mr.  Dodge. — He  gives  the  actual  cost.     That  is  the  design  of  it 

Mr.  Kasson. — And  the  market  value  is  sworn  to  when  they  are  shipped, 
otherwise  ? 

Mr.  Dodge. — Yes,  sir;  when  they  are  consigned.  But,  as  I  stated  to-day, 
and  as  the  gentlemen  will  all  understand,  it  is  utterly  impossible,  as  there 
is  no  other  oath,  that  where  we  put  up  the  price  of  our  goods  above  cost 
we  had  to  take  that  oath.  But  where  we  did  it  we  stated  to  the  Consul 
that  the  goods  cost  so  much,  and  we  put  them  up  so  much,  and  we  only 
took  the  oath  for  the  purpose  of  shipping  the  goods. 


AN  EXTRAORDINARY  HISTORY.  31 

Mr.  Kasson. — There  is  precisely  the  point.  But  why  do  you  have  in  that 
case  to  swear  to  tlie  marivet  value  at  all  ? 

Mr.  Dodge. — We  do  not,  sir. 

Mr.  Kasson. — Then  where  is  the  difficulty  of  swearing  to  the  actual  cost 
of  any  goods?  I  do  not  speak  of  your  case,  but  in  the  case  of  any  mer- 
chant? 

Mr.  Dodge. — It  is  just  here  If  we  swear  to  the  actual  cost  of  30s.,  and 
our  invoice  called  for  tin  at  30s.  when  it  came  before  the  appraiser  here,  if, 
knowing,  as  he  should,  that  the  price  was — through  a  rising  market — 36s. 
or  37s.  in  Liverpool,  the  valuation  of  cur  goods  would  not  merely  be 
increased  to  the  amount  of  the  rise,  but  we  would  incur  the  penalt\'  for 
undervaluation. 

Mr.  Kasson. — Does  that  follow  necessarily? 

Mr.  Dodge. — Yes,  sir. 

Mr.  Kasson. — If  you  make  a  statement  as  to  what  they  actually  cost, 
and  swear  to  it,  if  tluit  is  true,  do  you  mean  to  say — 

Mr.  Dodge  (interrupting). — I  mean  to  say  that  if  we  should  import  tin 
that  cost  30s.,  bought  on  previous  contract  at  30s.  in  Wales,  and  deliverable 
in  Liverpool,  as  seven  eighths  of  all  our  goods  generally  are,  and  the  mar- 
ket price  at  time  of  shipment  had  advanced  beyond  30s.,  if  we  invoice  them 
at  30s.  we  should  not  only  have  our  goods  advanced  to  market  value,  but 
should  be  also  subject  to  the  penalty  for  undervaluation. 

Mr.  Kasson. — If  you  also  stated  the  market  value  as  different  from  the 
cost  price,  so  that  there  was  no  concealment? 

Mr.  Dodge. — 1  never  have  known  an  invoice  made  out  with  two  prices. 

Mr.  Kasson. — But  the  law  calls  for  a  statement  of  the  actual  cost.  That 
is,  what  is  known  as  the  owner's  oath. 

Mr.  Dodge. — Yes,  sir;  that  is  true. 

Mr.  Kasson. — Does  the  law  involve  the  merchant  in  this  difficulty — that 
if  he  swears  to  the  actual  cost,  and  the  appraiser  at  New  York  finds  that 
the  market  value  is  different,  about  which  there  can  be  no  misrepresenta- 
tion by  the  merchant,  the  merchant  is  liable  to  a  penalty  in  that  case  ? 

Mr.  Dodge. — That  is  so  invariably.  It  is  just  the  difficulty.  There  would 
be  no  difficulty  in  entering  our  goods  always  at  cost  if  it  was  not  for  this 
ruling  at  the  Custom  House. 

Mr.  Kasson. — Do  you  have  to  make  any  oath  in  that  case  as  to  the  mar- 
ket value  at  all  ? 

Mr:  Dodge. — No,  sir. 

Mr.  Kasson. — You  cannot  refer  to  the  law  which  puts  the  merchant  in 
that  condition,  can  you? 

Mr.  Dodge. — I  had  the  two  oaths  here  to-day. 


32  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  KassOxN. — But  the  other  oath,  I  mean. 

Mr.  Dodge. — I  do  not  know  the  law  reference.  There  arc  two  oaths.  One 
is  known  as  the  owner's  oatli,  and  then  there  is  the  consignor's  oath. 

Mr.  Kasson. — The  consignor's  requires  the  market  value  ? 

Mr.  Dodge. — Yes,  sir;  and  the  owner's  only  the  actual  cost. 

Mr.  Kasson. — I  see  at  once  how  the  consignor's  oath  may  subject  him  to 
difficulty  if  the  appraiser  thinks  differently  of  the  value,  but  where  there  is 
no  evidence  iu  the  appraiser's  hand  against  the  cost  price  which  the  mer- 
chant gives  in  his  oath,  I  was  not  aware,  and,  con.sequently,  your  state- 
ment is  a  surprise  to  me  that  he  is  subjected,  in  consequence  of  the  dif- 
ference between  the  actual  cost  and  the  market  value,  to  forfeiture. 

Mr.  Dodge. — Not  to  forfeiture,  but  to  a  penalty. 

Mr.  Kasson. — That  is  the  nature  of  it;  and,  if  it  is  so,  we  certainly  ought 
to  make  a  note  of  it. 

Mr.  Dodge. — You  will  find  that  it  is  so.  For  that  reason  we  alwaj's  put 
up  our  goods,  and  frequently,  as  I  mentioned  to-day,  in  the  change  of 
market  price  between  the  time  the  invoice  is  made  in  Liverpool  and  the 
time  of  the  arrival  of  the  steamer  here,  the  wires  will  give  a  change  in 
the  market  value  there  that  the  appraiser  knows  here  at  once;  and,  if 
we  think  the  difference  is  2s.  and  find  it  to  be"  so,  we  add  2s.  to  our 
entry. 

Mr.  Kasson. — Y^ou  enter  the  goods  at  the  market  value,  but  you  do  not 
swear  to  that  market  value  ? 

Mr.  Dodge. — The  only  oath  that  we  can  swear  to — the  only  oath  they  have 
in  the  Custom  House — as  owner  of  the  goods  is,  that  we  swear  that  that 
is  the  actual  cost.  As  1  have  mentioned  to  you,  my  partner,  Mr.  Stokes, 
said  about  two  years  ago  to  the  deputy  collector,  who  asked  him  to  swear 
to  an  invoice  on  the  cost:  "I  state  to  you  that  we  advanced  it  in  England 
t)S.,  and  now,  in  order  to  be  sure  of  the  market  value,  we  have  added  2.s'. 
more  to  the  entry."  He  said:  "Mr.  Stokes,  it  means  nothing  more  than 
that.  It  is  all  right."  It  is  quite  time,  gentlemen,  that  the  oaths  were 
changed. 

Mr.  Burchard. — If  you  have  knowledge  that  the  actual  price  is  higher 
than  the  invoiced  price,  is  it  not  your  duty  under  the  law,  or  the  duty  of  a 
merchant,  to  inform  the  Collector  and  have  the  invoice  corrected? 

Mr.  Dodge. — We  always  do  it. 

Mr.  Burchard. — Then  it  is  not  liable  to  forfeiture,  is  it  ? 

Mr.  Dodge. — 0,  no,  sir.  I  have  not  myself  personally  attended  the 
Custom  House  for  some  ten  or  fifteen  years,  but  there  is  a  certain  percent- 
age. If  the  appraiser  raises  the  value  of  the  invoice  above  such  a  per 
cent,  then  there  is  a  penalty  of  twenty  per  cent,  added. 


AN  EXTRAORDINARY  HISTORY.  33 

Mr.  Kasson, — I  recollect  the  law  as  to  that,  but  my  object  was  to  see 
what  connection  it  has  with  the  owner's  oath. 

Mr.  Dodge. — The  difficulty  is  the  constant  variation  between  cost  and 
market  value. 

Mr.  Kasson. — I  think  the  whole  Committee  understand  the  difficulty 
about  that  question.  My  point  was  to  see  how  your  oath  became  involved 
in  that. 

Mr.  DoDGK. — The  oath  ought  to  be  changed.  I  think  it  is  the  old  oath  of 
1799. 

Mr.  Kasson. — There  was  one  other  point,  so  far  as  your  personal  expla- 
nation is  concerned.  I  have  an  impression  from  what  you  said  that  you 
have  encountered,  in  the  settlement  you  made,  a  member — one  or  more 
members — of  Congress,  who  united  to  make  a  pressure  upon  you.  Did  I 
understand  you  correctly? 

Mr.  Dodge. — I  did  say  one  or  more.  I  did  not  say  they  had  united  to 
make  a  pressure.  I  said  that  the  fact  that  they  were  in  conclave  with 
these  men,  who  were  interested  in  collecting  the  largest  possible  amount 
of  money  that  they  could  get,  went  to  add  to  the  terror. 

Q. — You  were  aware  of  it  at  the  time  you  made  the  settlement  ? 

A. — Certainly.  We  knew  that  they  were  in  town.  There  were  no  less 
than  five  attorneys  constantly  consulting  with  those  men. 

Mr.  BuRCHARD. — Perhaps  it  was  my  want  of  attention  which  did  not 
enable  me  to  understand  whether  the  invoices  were  made  out  invariably 
at  the  market  or  cost  price.  Which  did  the  memorandum  show,  market  or 
cost  price  ? 

Mr.  Dodge. — The  little  memorandum  that  was  sent  out  with  those  few 
boxes  of  extra  tin  represented  the  cost  price  from  the  manufacturer. 

Mr.  BuRCHARD. — The  contract  price  ? 

Mr.  Dodge. — Yes,  sir. 

Mr.  BuRCHARD. — And  the  invoice  represented,  as  I  understand  you,  the 
market  price  ? 

Mr.  Dodge. — The  market  value,  as  near  as  we  could  get  at  it.  The  diffi- 
culty is  greatly  increased  from  the  fact  that  we  are  obliged  to  buy  our  tin, 
in  order  to  supply  our  customers,  on  very  large  contracts,  and  they  are 
coming  along  from  week  to  week,  some  from  one  manufacturer  and  some 
from  another.  We  put  them  in  the  warehouse  at  Liverpool,  where  we 
sometimes  have  50,000  boxes  piled  up.  We  send  them  by  steamship  and 
have  arrangements  with  the  various  lines  to  give  them  an  amount  of  dead 
weight  which  will  be  satisfactory,  and  do  not  frequently  know  the  amount 
they  may  require  until  within  a  few  hours  of  the  sailing. 

Mr.  BucHARD. — You  say  that  sometimes  the  contract  price  was  above 

3 


34  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

market  value,  as  in  the  case  of  those  that  were  produced  and  brought  up 
against  you,  and  in  other  cases  the  contract  price  was  below  ? 

Mr.  Dodge. — I  was  going  to  say  that  there  were  five  times  as  many  in- 
stances, by  actual  examination,  where  they  were  above  as  where  they  were 
below. 

Mr.  Roberts. — I  wish  to  ask  a  question  upon  the  matter  of  the  two  dis- 
tinct oaths.  There  is  an  oath  which  the  owner  takes  and  also  an  oath 
which  the  consignee  takes  ? 

Mr.  Dodge — Yes,  sir. 

Mr.  Roberts. — The  one  is  expected  to  state  the  cost  price  distinctly,  is 
it  not? 

Mr.  Dodge. — It  so  reads. 

Mr.  Roberts. — I  am  speaking  of  the  oath  as  it  reads  now. 

Mr.  Dodge. — Yes,  sir  ;  it  so  reads. 

Mr.  Roberts. — The  other  states  the  actual  value  ? 

Mr.  Dodge. — Yes,  sir. 

Mr.  Roberts. — Would  there  be  any  difficulty,  in  the  case  of  an  owner 
desiring  to  state  the  market  value,  to  combine  with  the  owner's  oath  the 
statement  that  he  does  include  the  market  value  as  part  of  the  oath  ? 

Mr.  Dodge. — I  do  not  believe  that  a  Consul  would  feel  himself  authorized 
to  administer  any  oath  other  than  the  one  prepared  by  the  regulations  of 
the  Treasury  Department. 

Mr.  Roberts. — I  understand  you  to  say,  then,  practically  there  is  but  one 
form  of  oath  taken  by  the  owner  ? 

Mr.  Dodge. — I  never  have  known  but  one,  sir. 

Mr.  Roberts. — Then,  does  it  make  any  difference  in  the  fact  that  your 
house  abroad  were  the  owners  of  this  tin,  as  to  the  increase  in  valuation  ? 
Was  it  because  you  were  the  owners  abroad  that  y6u  felt  at  liberty  to  add 
to  the  value  or  to  reduce  the  value  of  the  tin  ? 

Mr.  Dodge, — As  I  stated  before,  the  object  in  increasing  the  price  was  to 
conform  to  the  market  price,  so  as  to  pass  the  entry  here  without  any  diffi- 
culty with  the  appraiser. 

Mr.   Roberts. — Exactly  ;  but   because  you  were    owners    abroad   your 
foreign  house  felt  at  liberty  to  make  that  price  accord  with  the  market  value  ? 
Mr.  Dodge. — That  was  the  practice  of  the  house.     But  we  have  admitted 
that,  probably,  so  far  as  placing  it  below,  in  some  cases  sixpence  or  a  shil- 
ling, we  erred  ;  we  should  have  been  more  correct. 

Mr.  Roberts. — Let  me  change  the  form  of  my  question.  If  this  had  not 
been  owned  abroad — if  you  had  had  no  foreign  house — would  you  have 
regarded  that  as  making  any  difference  in  the  form  that  you  should  have 
adopted  in  the  entry  ? 


AN  EXTRAORDINARY  HISTORY.  35 

Mr,  Dodge. — Then  we  should  have  made  the  entry  with  the  oath  of  the 
consignor  of  the  goods,  because  then  we  should  have  been  consigning  from 
the  house  in  the  foreign  country  to  the  house  here. 

Mr.  Roberts. — Then  I  do  understand  you  to  say  that  the  fact  that  you 
had  a  foreign  house  was  really  the  occasion  of  this  difference  in  statement? 

Mr.  Dodge. — Well,  I  suppose  so,  sir. 

Mr.  Roberts. — Perhaps  you  will  be  kind  enough  to  answer  this  question 
directly,  Whether  the  fact  that  you  had  the  foreign  house,  which  was  the 
purchaser  of  this  tin,  made  any  difference  in  the  form  of  the  entry  ? 

Mr.  Dodge. — The  distinction  of  the  house,  as  I  have  mentioned  before, 
led  them  to  feel,  probably,  that  they  were  authorized  in  that  respect,  being 
an  English  house,  to  make  the  change.     That  is  what  I  meant  to  say. 

Mr.  Roberts. — So  I  understand  you  to  say  ;  but  I  desired  to  get  it  a 
little  more  particularly.  May  I  ask  what  is  your  present  impression  of 
introducing  tin  in  like  cases,  if  the  value  is  greater  or  less  than  the  cost  ? 

Mr.  Dodge. — There  has  not  been  such  fluctuations  within  the  past  year, 
but  we  are  now  in  every  case  entering  our  goods  at  cost,  and  then  having 
whatever  change  is  made  made  here,  in  order  to  conform  to  the  market, 
unless  there  should  be  such  great  variation  as  there  has  been.  Then  there 
would  be  no  other  safety  for  us  ;  we  could  not  ship  the  goods  to  this 
country  unless  we  should  make  the  advance. 

Mr.  Kasson. — Let  me  read  the  law  ;  "  The  party  making  an  entry,  at  the 
time  when  he  produces  his  invoice  and  makes  entry,  and  not  afterward, 
may  make  such  addition  to  the  cost  or  value  given  in  the  invoice  as  in  his 
opinion  shall  raise  the  same  to  the  actual  market  or  wholesale  price  of  the 
merchandise  at  the  period  of  exportation  to  the  United  States  in  the  prin- 
cipal market  of  the  country  where  it  is  imported."  I  understand  Mr.  Dodge 
to  say  that  they  were  made  out  upon  the  other  side  in  some  cases,  instead 
of  being  made  out  at  the  time  of  the  entry. 

Mr.  Roberts. — Yes,  that  is  what  I  understood.  State  whether  these 
papers^  which  are  called  duplicate  invoices,  were  any  different  from  the 
ordinary  memorandum  bill  which  would  be  sent  from  the  manufacturer  to 
the  factor. 

Mr.  Dodge. — They  were  the  actual  bills  themselves,  put  under  a  copy 
press  and  pressed  out,  and  sent  in  the  hurry  of  shipment  in  place  of 
making  duplicates,  and  that  is  all  the  difference. 

Mr.  Beck. — I  wish  to  put  to  you  this  case.  Suppose  you  had,  from  any 
cause,  been  able  to  purchase  goods  in  Manchester,  Liverpool  or  London, 
for  10  per  cent,  below  the  market  price,  either  because  you  had  found  a 
man  in  danger  of  insolvency,  or  from  any  other  cause,  who  desired  to  sell 
you   goods  at  10  per  cent,  below  the  market  price,  while   all  the  other 


36  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

merchants  were  buying  at  10  per  cent,  more  than  you,  could  you  have 
safely  entered  with  the  Consul  those  goods,  thus  bought  at  10  per  cent, 
below  the  net  market  price,  and  brought  them  here  to  New  York  ? 

Mr.  Dodge. — No,  sir. 

Mr.  Beck.— Why  ? 

Mr.  Dodge. — For  the  simple  reason  that  the  cost  price,  if  this  was  only 
an  isolated  case,  would  be  10  per  cent,  below  the  market  value. 

Mr.  Beck. — But  if  that  form  of  oath  alone  requires  you  to  swear  to  the 
truth,  the  truth  would  be  that  you  had  paid  10  per  cent,  below  the  market 
value  for  them. 

Mr.  Dodge. — If  we  entered  them  (if  there  was  the  difference  of  10  per 
cent.)  at  actual  cost,  we  should  at  once  apprise  the  firm  here  that  there 
was  to  be  added,  when  it  came  here,  the  difference  to  the  entry,  in  order  to 
make  it  market  value. 

Mr.  Beck. — Is  the  market  value  required  in  the  oath  ? 

Mr.  Dodge. — Not  in  the  oath  of  the  owner,  but  in  the  oath  of  the  con- 
signee when  it  is  consigned.  But  when  it  comes  over  every  invoice  must 
go  before  the  appraiser,  and  these  appraisers  receive  weekly,  or  ought  to, 
the  prices  current  from  all  the  principal  markets  in  Europe  for  all  the  dif- 
ferent articles  they  have  charge  of,  and  they  have  a  circular,  which  is  issued 
weekly  in  London,  of  the  prices  of  tin  plate,  and  are  supposed  to  have  it 
in  their  hands  to  know  the  price  of  tin  plate. 

Mr.  Beck. — So  that  your  habit  was,  if  you  bought  goods,  say  on  the  1st 
of  April,  to  be  delivered  on  the  1st  day  of  July,  in  Liverpool,  and  the  price 
had  gone  up  10  per  cent,  above  what  you  had  actually  purchased  it  at,  to 
enter  it  on  the  1st  of  July  at  the  ten  per  cent,  advance  with  the  Consul 
there  ? 

Mr.  Dodge. — Yes,  sir;  that  was  our  habit. 

The  Chairman. — I  apprehend  if  we  should  trace  the  cause  of  this  difficulty 
we  should  find  it  in  this,  that  the  oath  was  adopted  at  a  very  early  day  in 
the  history  of  our  customs  system,  and  that  modifications  of  the  law  have 
taken  place  which  have  disjointed  the  oath  and  the  law. 

Mr.  Beck  (to  Mr.  Dodge). — Have  you  stated,  or  have  you  memoranda  that 
show,  or  had  you  any  means  of  showing,  when  your  books  were  mutilated 
by  your  clerk,  how  much  would  have  appeared  upon  your  books  if  all  the 
items  had  been  given  that  had  been  overvalued  as  well  as  undervalued?  I 
understand  your  clerk  only  exhibited  the  undervalues. 

Mr.  Dodge. — As  far  as  we  can  ascertain  he  took  the  great  proportion  of 
all  of  them  off,  although  in  some  cases,  where  they  were  actually  the  same 
and  no  change  in  the  market,  these  were  left.  But  where  the  invoiced  price 
was  below  the  cost  a  sixpence  or  so,  those  were  very  carefully  taken  and 


AN  EXTRAORDINARY  HISTORY.  37 

preserved,  and  handed  over  to  the  special  agent.  In  cases  where  the  in- 
voice price  was  above  the  cost  they  were  torn  off  from  the  books,  and  the 
place  where  they  were  torn  off  can  be  shown  on  our  invoice  book. 

Mr.  Beck. — Have  you  any  means  of  showing  to  what  they  would  have 
amounted  ? 

Mr.  Dodge. — I  do  not  know  but  that  we  might  have.  I  have  never  looked 
at  it  at  all.  Neither  should  we  have  had  the  other  data  excepting  that  our 
English  house,  as  soon  as  they  were  apprised  of  this  difficulty,  immediately 
sent  us  out  a  statement  which  I  had  here  this  morning — the  rates  to  which 
they  had  advanced  the  tin — and  showing  the  enormous  difference  between 
that  and  any  little  difference  the  other  way.  That  I  have  brought  hero.  It 
is  at  the  service  of  the  Committee. 

Mr.  Beck. — Do  I  understand  you  to  say  that  in  the  course  of  five  years, 
the  time  for  which  your  books  were  investigated,  your  importations  were 
some  forty  millions,  and  duties  of  eight  or  ten  millions  paid,  and  that  there 
was  only  about  $6,000  of  undervaluations  of  goods  and  about  $1,600  of 
duties  unpaid  in  all  that  time  ? 

Mr.  Dodge. — That  is  it,  sir;  that  is  the  actual  return. 

Mr.  Beck. — In  five  years  time  ? 

Mr.  Dodge. — In  five  years  time. 

Mr.  Waldron. — Five  years  preceding  the  1st  of  January,  1873  ? 

Mr.  Dodge. — Yes,  sir.  Mr.  Jayne  says  :  "  In  reply  to  your  letter  addressed 
to  Mr.  Bliss,  making  inquiry  as  to  what  was  covered  by  my  report  in  the 
case  of  Phelps,  Dodge  &  Co.,  I  would  say  that  it  covered  all  the  importa- 
tions of  that  house  for  five  years  next  preceding  the  1st  of  January,  1873." 

Mr.  Wood. — Mr.  Dodge,  I  have  a  few  questions  to  put  to  you,  and  I  will 
say,  before  commencing,  that  they  are  put  for  the  purpose  of  eliciting  in- 
formation from  you,  as  an  old  importing  merchant  of  New  York,  and  not  for 
the  purpose  of  criticising  your  own  case,  or  investigating  it,  because  I  do 
not  think  that  this  is  the  proper  place  or  lime  to  do  that.  I  understood 
you  to  say  to-day  that  no  account  was  taken  of  the  market  value,  either  at 
Belfast  or  Liverpool,  or  at  Penang  or  Singapore.  What  did  you  mean  by 
that,  that  no  account  was  taken  of  the  market  value  ?  Did  you  mean  at  the 
New  York  Custom  House  ? 

Mr.  Dodge. — I  was  not  aware  that  I  made  that  statement. 

Mr.  Wood. — You  said  no  account  was  taken  of  the  difference  of  value  in 
goods  shipped  either  at  Belfast,  Liverpool,  Penang  or  Singapore. 

Mr.  Dodge. — I  was  speaking  of  block  tin,  and  I  mentioned  that,  as  a  gen- 
eral thing,  the  markets  at  Singapore  and  Penang  were  identical,  and  that 
when  we,  for  the  purpose  of  shipping  by  an  American  vessel,  sent  tin  over 
from  Singapore  to  Penang,  or  vice  versa,  just  as  there  might  be  an  American 


38  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

vessel  loading;,  as  the  market  value  was  usually  the  same  at  both  places, 
whatever  it  cost  to  carry  from  one  place  to  the  other  was  not  added  to  the 
invoice. 

Mr.  Wood. — Then  the  charges  of  transportation  from  Penang  to  Singa- 
pore were  not  regarded  as  making  an  increased  market  value  at  the  place 
of  exportation  ? 

Mr.  Dodge. — If  they  had  been  added  we  should  have  paid  duty  on  the 
increase. 

Mr.  Wood. — I  want  to  know  what  the  custom  or  fact  is? 

Mr.  Dodge. — As  to  the  fact,  outside,  I  do  not  know  what  that 

Mr.  Wood  (interrupting). — You  spoke  of  Belfast. 

Mr.  Dodge. — I  simply  spoke  of  a  case  that  came  before  the  Treasury  for 
adjudication.  It  was  on  an  invoice  of  linen  at  a  given  price,  and  the  oath 
was  taken  before  the  Consul  at  Belfast.  If  for  the  purpose  of  securing  a 
better  freight,  or  more  rapid  transit,  they  were  sent  by  steamer  from  Bel- 
fast to  Liverpool,  and  then  shipped,  there  was  no  addition  to  the  price,  be- 
cause the  voyage  of  exportation  was  considered  as  beginning  at  Belfast, 
where  the  consular  oath  was  taken.  The  Treasury  Department  ruled  here, 
if  I  am  not  mistaken,  that  where  the  consular  oath  was  taken  there  was  to 
be  no  addition. 

Mr.  Wood.— How  was  it  in  your  own  case,  where  your  goods,  for  in- 
stance, that  are  made  in  Wales  are  shipped  at  Liverpool  lor  New  York. 
The  market  value  in  Wales  is  the  market  value  of  the  invoice  in  Liverpool  ? 

Mr.  Dodge. — As  I  mentioned  before,  I  suppose  se\^en  eighths  of  all  our 
contracts  v  ith  the  manufacturers,  for  the  last  five  or  six  years,  have  been 
made  deliverable  in  Liverpool. 

Mr.  Wood. — At  their  own  expense? 

Mr.  Dodge. — Yes,  sir. 

Mr.  Wood. — And  risk? 

Mr.  Dodge. — Yes,  sir.  We  pay  so  much  for  them  delivered  in  Liverpool. 
The  cost,  I  suppose,  by  coaster  from  Monmouthshire,  is  about  three  pence  a 
box. 

Mr.  Wood, — Then  your  invoices  are  made  up  in  Liverpool  by  your  own 
house  there  ? 

Mr.  Dodge. — Yes,  sir,  always;  and  the  only  mistake  that  we  have  made, 
in  the  light  of  the  decision  of  the  Secretary  of  the  Treasury,  was  that  if, 
when  our  goods  left  Monmouthshire,  we  had  gone  before  the  Consul  at 
Cardiff  and  sworn  to  the  invoice,  there  would  have  been  no  doubt  about  it. 

Mr.  Wood. — Then  your  invoices  are  made  up  in  Liverpool,  although  your 
goods  are  bought  in  Wales,  and  sent,  at  the  cost  and  at  the  risk  of  the  man- 
ufacturer, to  you  to  Liverpool,  the  port  of  exportation  ? 


AN  EXTRAORDINARY  HISTORY.  39 

Mr.  Dodge. — Yes,  sir. 

Mr.  Wood. — Your  bills  of  lading  are  made  up  there.  When  are  those 
bills  of  lading  made  up?  For  instance,  the  steamer  is  going  to  sail  at  three 
o'clock  for  New  York,  at  what  time  of  the  day,  and  probably  at  what  hour, 
are  your  bills  of  lading  made  up? 

Mr.  Dodge. — If  possible,  we  always  get  our  goods  on  board  the  day  be- 
fore, and  then  the  young  men  are  at  work,  as  busily  as  possible,  up  to 
about  twelve  o'clock,  in  getting  the  duplicate  invoices  and  bills  of  lading  all 
ready  before  the  hour  of  sailing. 

Mr.  Wood. — Twelve  o'clock  of  the  day  of  sailing  ? 

Mr.  Dodge. — Yes,  sir.  The  rule  is  that  the  oath  must  be  taken  by  one 
o'clock. 

Mr.  Wood. — Are  not  invoices  made  up  before  you  receive  from  the  ship 
bills  of  lading? 

Mr.  Dodge. — L should  say,  as  a  matter  of  fact,  they  were  almost  always. 
After  we  find  out  just  how  many  boxes  are  on  board  the  bill  of  lading  is 
made  up  and  signed. 

Mr.  Wood. — I  ask  for  this  reason,  I  want  the  gentlemen  of  the  Committee, 
who  probably  do  not  know  so  much  of  these  matters  as  you  and  I,  to  know 
that  in  making  up  a  bill  of  lading  at  Liverpool,  to  go  in  the  same  steamer 
by  mail,  that  is  often  done  in  advance  of  the  sailing  of  the  steamer,  and 
that  in  no  case  will  a  bill  of  lading  be  signed  until  the  goods  are  actually 
on  board  the  vessel. 

Mr.  Dodge. — That  is  so. 

Mr.  Wood. — Now,  may  it  not  occur  in  this  connection,  that  there  may 
have  been  charges  upon  a  bill  of  lading,  which  is  an  element  of  the  cost, 
and  that  they  do  not  reach  the  invoice,  and  are  not  put  upon  the  invoice  as 
an  element  of  its  cost  ? 

Mr.  Dodge — My  own  impression  is  that  with  the  constant  making  up  of 
the  invoices  all  the  time  there  are  none  of  our  young  men  in  the  office  who 
do  not  know  the  amount  of  the  cartage  from  the  warehouse,  and  the  num- 
ber of  loads,  from  the  uniform  cost,  day  after  day,  of  doing  it.  If  there  are 
so  many  boxes  they  divide  it  by  such  a  number,  taken  by  each  dray,  and 
they  have  no  difficulty  in  arriving  at  what  is  the  proper  amount  of  charges. 

Mr.  Wood. — You  stilted  a  case  here  to-day  in  which  you  showed  a  bill  of 
lading  that  had  a  charge  of  five  shillings  or  five  pounds,  I  forget  which, 
which  was  not  included  in  the  invoice,  and  which  was  made  the  subject  of 
charge  against  you. 

Mr.  Dodge. — In  examining  the  entry  it  was  on  the  bill  of  lading. 

Mr.  Wood. — But  not  on  the  invoice  ? 

Mr.  Dodge. — It  was  not  on  the  invoice.  Our  young  man  omitted  to  see 
the  discrepancy  in  time. 


40  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Wood. — In  Liverpool  ? 

Mr.  Dodge. — -He  ouglit  to  have  seen  it  here.  He  ought  to  have  seen  the 
discrepancy  between  the  amount  added  for  charges  and  the  amount  that 
was  on  the  bill  of  lading.  The  bill  of  lading  was  correct,  but  there  was 
three  and  sixpence  difference  between  the  amount  on  the  bill  of  lading  and 
the  amount  on  the  invoice. 

Mr.  Wood. — What  would  be  the  result  in  the  Custom  House  in  New 
York,  if  in  Liverpool,  as  well  as  in  New  York,  some  charges  put  upon  the 
bill  of  lading  in  Liverpool  had  been  omitted  in  the  invoice;  what  would 
have  been  the  result  if,  in  consequence  of  that  omission,  the  goods  had  been 
seized  ? 

Mr.  Dodge. — That  depends  entirely,  I  suppose,  upon  the  final  decision  as 
to  intent. 

Mr.  Wood. — It  would  be  subject,  under  the  law,  to  seizure  ? 

Mr.  Dodge. — Certainly,  sir. 

Mr.  Wood. — If  that  omission  was  twenty-five  cents,  the  principle  would 
apply  as  much  as  if  it  was  a  million  dollars? 

Mr.  Dodge. — I  do  not  know  that  the  law  makes  any  diflference.  It  would 
make  a  diflference,  probably,  in  judging  of  the  equities  of  the  case  and  the 
probabilities  of  fraud. 

Mr.  Wood. — You  spoke  this  evening  in  favor  of  specific  instead  o{  ad  val- 
orem duties.  Did  we  understand  you  that  that  applied  simply  to  the  goods 
you  imported  or  to  the  system  ? 

Mr.  Dodge. — It  applied  to  everything  where  it  could  be  done — every  case 
which  will  prevent  a  fraud. 

Mr.  Wood. — You,  as  a  merchant  of  experience,  give  that  as  your  opinion  ? 

Mr.  Dodge. — I  have  not  a  doubt  about  it. 

Mr.  Wood. — Why  do  you  prefer  that  system  ? 

Mr.  Dodge. — Because  you  do  away  with  this  perplexing  question  of  cost 
and  market  value,  and  there  will  be  no  diflficulty  in  making  your  invoices 
at  cost  at  once.  It  gets  rid  of  the  whole  difficulty  of  charges  and  every- 
thing else. 

Mr.  Wood.-.— And  you  are  in  favor  of  it  as  a  general  system  ?  Of  course 
it  could  not  be  applicable  to  everything. 

Mr.  Dodge. — Of  course  not ;  but  so  far  as  it  can  be  done  it  would  simplify 
the  whole  thing,  and  the  business  of  the  Custom  House.  It  would  relieve 
the  merchant  from  a  great  anxiety.  There  is  no  pleasure  in  doing  business 
now,  and  there  has  not  been  for  years. 

Mr.  Wood. — Did  you  examine  the  English  system  while  you  were  abroad  ? 

Mr.  Dodge. — I  did  not. 

Mr.  Wood. — Have   you  ever  given   any  reflection,  or  have  the  old  mer- 


AN  EXTRAORDINARY  HISTORY.  41 

chants  of  New  York  ever  given  any  reflection  to  the  proposition  of  levying 
these  duties,  so  far  as  we  can,  upon  American  values  in  place  of  foreign 
values  ? 

Mr.  Dodge. — There  has  been  a  great  deal  said  about  it ;  but  I  think  there 
is  more  difficulty  in  ascertaining  what  is  the  real  American  value  of  foreign 
products  than  the  market  value  of  the  same  goods  in  the  country  from 
which  they  are  shipped. 

Mr.  Wood. — You  liave  come  to  no  conclusion  yourself? 

Mr.  Dodge. — My  own  impression  is  that  there  would  be  very  great  diffi- 
culty in  a  home  valuation.  For  instance,  take  the  price  of  iron  in  Great 
Britain.  It  is  regulated  by  an  association,  and  has  been  for  the  past  five 
and  twenty  years.  That  association  meets  every  quarter,  and  they  fix  a 
price,  and  that  price  is  the  uniform  price.  Of  course  there  is  a  variation, 
but  that  is  the  general  understanding.  If  a  man  should  order  five  hundred 
tons  of  iron  at  quarter  day,  he  would  expect  to  pay  the  price  at  quarter 
day,  and  that  would  be  called  the  market  price. 

Mr.  Wood. — The  goods  that  you  import  are  of  a  staple  character  gene- 
rally, are  they  not  ? 

Mr.  Dodge. — There  are  certain  sizes  of  tin  plate  that  are,  but,  as  I  men- 
tioned to-day,  there  have  sprung  up  within  the  past  few  years  very  large 
manufactories  in  this  country  of  articles  made  from  all  sizes  of  tin  plate  ; 
consequently  they  have  to  be  ordered  specifically  for  the  manufacturer 
according  to  his  business.  You  cannot  go  into  the  market  and  buy  them. 
There  is  no  way  but  to  order  them. 

Mr  Wood. — I  wish  to  ask  your  opinion  also  upon  another  very  impor- 
tant question.  We  have  a  system  in  New  York,  extensively  carried  on  of 
late  year.^,  of  allowing  the  merchants  to  have  their  own  bonded  warehouses, 
where  goods  arc  bonded  and  kept  in  possession  of  the  merchant,  he  giving 
bonds,  of  course,  to  the  Government  in  the  proper  penalties  for  violation  of 
his  obligations,  but  yet  they  are  private  bonded  warehouses.  What  is 
your  idea  of  that  system  ? 

Mr.  Dodge. — My  impression  is  that  it  is  open  to  risk. 

Mr.  Wood. — You  think  it  is  liable  to  very  great  abuse  ? 

Mr.  Dodge. — I  think  there  is  more  opportunity  for  it — a  great  deal. 

Mr.  Wood. — Did  you  ever  hear  it  discussed  among  the  merchants  ? 

Mr.  Dodge. — 0,  yes  ;  very  often. 

Mr.  Wood. — With  reference  to  the  machinery  of  the  Custom  House,  do 
you  not  think  that  it  might  be  very  materially  simplified,  and  a  large  num- 
ber of  the  force  employed  done  away  with  ? 

Mr.  Dodge. — Do  you  mean  as  the  laws  now  exist,  or  under  better  laws 
and  specific  duties? 


42  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Wood. — I  should  like  your  opinion  as  to  the  existing  law,  and  also 
as  to  the  changes,  and  what  could  be  effected  by  them. 

Mr.  Dodge. — I  was  under  examination  by  a  Committee  at  the  Custom 
House  some  years  ago,  and  I  tried  to  give  a  very  honest  description  of 
what  I  thought  was  the  then  state  of  the  Custom  House,  and  my  own  im- 
pression is  that  those  who  cluster  around  the  Custom  House  have  never 
thanked  me  for  it,  to  say  the  least.  If  I  should  give  any  opinion  about  it, 
it  would  be  exactly  what  I  gave  then,  only  a  little  more  so. 

Mr.  Wood. — What  is  your  opinion  with  reference  to  the  system  of  moie- 
ties ? 

Mr.  Dodge. — Well,  sir,  I  cannot  conceive  it  possible  that  such  a  system 
can  continue  in  a  country  like  ours,  and  under  the  present  arrangement, 
where  special  officers  are  empowered  to  act  as  spies  and  detectives,  and  to 
use  such  means  as  they  think  right  and  proper  to  secure  their  own  ends. 
I  cannot  see  that  it  is  possible  for  a  regular  merchant  to  continue  his  busi- 
ness with  any  safety,  for  this  reason,  that  the  inducement  on  the  part  of 
the  special  agents  to  entrap  him  is  so  great.  These  men  are  perhaps 
desirous  to  do  no  wrong,  but  still  they  are  very  anxious  to  secure  their 
large  moieties.  They  feel  that  they  have  a  rich  placer  and  they  want  to 
dig  while  it  is  in  their  power.  There  is  great  danger  of  their  assuming 
that  there  has  been  fraud  where  there  never  had  been.  Thus,  the  very 
taking  of  the  books  and  papers  of  a  merchant  who  has  maintained  an 
honorable  standing,  and  whose  reputation  and  credit  depend  upon  his 
moral  integrity  as  well  as  his  capital,  and  the  holding  that  man  up  to  the 
country  as  having  defrauded  the  Government,  and  assuming  that  he  is 
guilty  until  he  has  an  opportunity  to  prove  his  innocence,  may  ruin  him 
His  credit  is  gone,  his  capital  is  gone  ;  he  has  spent  his  life  in  building  up 
a  reputation  that  the  Government  has  stricken  down  by  reason  of  a  mis- 
take made  by  a  detective.  No  American  merchant  will  submit  to  it  or 
live  under  it. 

Mr.  Wood. — Do  you  not  think,  upon  the  other  hand,  that  the  allowance 
of  an  additional  inducement  to  a  proper,  vigilant  and  experienced  man, 
would  be  an  advantage  to  the  revenue  ? 

Mr.  DoDGE."^It  might  possibly  be  an  advantage  to  the  revenue  directly; 
indirectly,  on  utter  loss  of  confidence »on  the  part  of  the  merchant.  If 
proper  confidence  cannot  exist  between  tlie  mercantile  community  and  the 
Government  there  will  be  no  such  thing  as  a  revenue,  except  what  may  be 
acquired  from  foreigners.  I  do  not  wish  to  be  misunderstood.  The  Gov- 
ernment should  have  carefully  prepared  laws,  and  it  should  pay  a  salary  to 
men  sufficient  to  induce  them  to  do  their  duty.  It  should  have  intelligent 
men,  men  of  high  character  and  standing  in  the  Custom  House,  not  having 


AN  EXTRAOKDINARY  HISTORY.  43 

a  Custom  House  simply  and  solely  for  the  purpose  of  making  places  for 
men  who  know  nothing  about  business,  and  have  never  had  a  particle  of 
business  experience. 

Mr.  Wood. — Could  you  suggest  any  improvement  in  the  law  with  refer- 
ence to  seizures  of  books  and  papers  ? 

Mr.  Dodge. — I  could  suggest  but  one,  and  that  is  the  entire  abrogation. 
It  does  not  belong  to  a  highly  intelligent  people.  It  is  a  remnant  of  the 
dark  ages  and  belongs  to  them,  and  not  to  us. 

Mr.  Wood. — Could  you  suggest  anything  with  reference  to  the  confisca- 
tion of  an  entire  invoice  by  the  fraudulent  violation,  so  to  speak,  if  you 
please,  of  one  component  article  of  the  invoice? 

Mr.  Dodge. — The  gentlemen,  I  believe,  of  the  legal  profession,  believe 
that  the  penalty  should  bear  some  proportion  to  the  crime.  I  had  invoices 
to-day  here,  where,  under  the  law,  they  would  be  confiscated  for  between 
$20,000  and  $30,000  for  a  mistake  of  $20.  Outside  of  customs  matters 
there  is  no  law  upon  the  statute  books  that  knows  ony  such  thing. 

Mr.  NiBLACK. — I  understand  you  to  say  tliat  with  a  specific  duty  all  this 
difficultv  about  the  Custom  House  oath,  even  in  its  present  form,  would  bo 
relieved  ? 

Air.  Dodge. — That  is,  only  so  far  as  it  i.s  possible  to  have  specific  duties 
extend  ♦ 

Mr.  NiBLACK. — ^I  mean  as  regards  your  trade. 

Mr.  Dodge. — Yes,  sir. 

Mr.  NiBLACK. — If  one  cent  a  pound  was  assessed  upon  tin  plate,  you 
would  then  have  no  difficulty  in  regard  to  customs  ? 

Mr.  Dodge. — Of  course  there  must  be  the  necessary  checks  to  see  that 
the  proper  quantity  is  received  and  the  proper  weight  given.  There  is 
no  difficulty  about  that. 

Mr.  NiBLACK. — Yes,  sir;  but  there  would  be  no  difficulty  about  the  cost 
price  and  the  market  price  ? 

Mr.  Dodge. —  Not  at  all. 

Mr.  Waldron. — I  understood  you  to  say  that  if  tlie  value  had  increased 
from  the  time  of  the  shipment  of  the  tin  in  Liverpool  until  its  arrival  in 
New  York,  the  increase  in  value  was  to  be  added  in  making  the  entry  here 
for  the  purpose  of  assessing  the  duty  ? 

Mr.  Dodge.-— 'That  is  the  uniform  rule  with  our  Custom  House  in  New 
York. 

Mr.  Waldron  —Suppose  there  had  been  a  decline  in  the  value  from  the 
time  of  the  shipment  until  its  arrival  ? 

Mr.  Dodge. — Then  no  change  is  made.     The  law  does  not  know  that. 

Mr.  Waldron. — You  spoke  about  having  paid  $56,000  on  single  importa- 


44  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

tions  over  and  above  what  was  the  fair  duty  to  have  been  paid  the  Gov- 
ernment.    How  did  that  arise  ? 

Mr.  Dodge. — I  think  I  stated  that  it  was  $58,000  on  a  single  contract 
with  one  manufacturer — not  in  a  single  invoice.  We  never  had  an  invoice 
as  large  as  that. 

Mr.  Waldron. — Did  that  arise  from  the  fact  that  the  market  value  was 
below  the  contract  price  ? 

Mr.  DoDCxE. — No;  the  contract  price  was  a  great  deal  below,  and  we 
added  to  it  to  make  it  equal  to  market  value.  Tin  plates  that  cost  32s.  Qd. 
were  invoiced  at  40s. 

The  Chairman. — Tn  speaking  of  the  one  cent  a  pound  duty  upon  tin, 
which  is  the  duty  you  suggested,  I  understood  you  to  say  that  it  should 
embrace  the  weight  of  the  boxes  also,  and  then  it  would  yield,  in  your 
judgment,  an  increase  of  the  revenue  ? 

Mr.  Dodge. — Yes,  sir. 

The  Chairman. — Would  you  say  one  cent  a  pound  for  the  boxes,  too  ? 

Mr.  Dodge. — In  order  to  bring  it  up  to  that.  If  we  simply  took  the 
weight  of  the  tin  it  might  come  below  the  present  duty.  It  was  found, 
from  a  careful  calculation,  that  by  adding  the  weight  of  the  box  it  would 
make  between  five  and  six  hundred  thousand  dollars  more.  I  think  in  the 
case  of  last  year,  tabulating  the  different  sizes  and  taking  their  weights 
(because  every  box  is  known  by  its  weight),  and  adding  them  up,  which 
was  done  with  a  great  deal  of  care,  it  would  have  made  the  duties  last 
year  between  five  and  six  hundred  dollars  more. 

The  Chairman. — Some  five  years  ago,  as  a  member  of  the  Committee  of 
Ways  and  Means,  we  were  holding  an  investigation  at  the  New  York 
Custom  House.  The  then  Collector,  Mr.  Grinnell,  said  to  us:  "Gentlemen, 
you  must  remember  that  the  entire  legal  ability  of  Great  Britain  and  the 
continent  is  employed  on  the  question  as  to  how  it  may  evade  our  custom 
law^s."  In  view  of  that  suggestion  I  put  this  question:  Whether  such  a 
duty  would  not  probably  lead  to  a  reduction  in  the  weight  of  the  boxes; 
whether  it  might  not  open  a  means  of  so  reducing  the  weight  of  the  boxes 
as  to  affect  the  revenue  ? 

Mr.  Dodge. — In  reply  to  that  I  would  simply  say  that  the  boxes  are 
made  as  light  as  it  is  possible  to  make  them  now,  in  order  to  save  the  cost 
of  transportation,  because  in  the  tonnage  the  box  is  included  in  the  freight, 
and  tin  platebeing  so  very  heavy  (the  smallest  box  containing  112  pounds), 
the  boxes  must  have  a  sufficient  amount  of  strength  or  they  would  break 
to  pieces  while  loading  or  unloading,  and  the  tin  would  be  injured. 

Mr.  Roberts. — State  whether  there  would  be  any  greater  chance  of 
fraud  if  the  boxes  were  not  included,  or  whether  it  would  interfere  with 


AN  EXTRAORDINARY  HISTORY.  45 

the  convenience  of  estimating  the  duties  if  the  weight  of  the  boxes  were 
not  included. 

Mr.  Dodge. — It  would  probably  be  better  to  have  them  without  the 
boxes,  because  the  actual  cost  is  on  the  weight  of  the  tin  itself  and  not  the 
box.  But  we  found  in  adding  up  and  going  tlirough  the  investigation, 
that  if  we  simply  took  the  weight  of  the  tin  itself  at  a  cent  a  pound,  it 
might  fall  short  of  the  present  duty,  whereas,  adding  the  box  it  made  five 
or  six  hundred  thousand  dollars  more. 

I  made  one  mistake  this  morning,  Mr.  Chairman,  which,  with  your  per- 
mission, 1  will  ask  the  stenographer  to  correct.  One  of  my  friends,  after  I 
left  the  committee  room,  informed  me  that  I  had  stated  that  our  total  impor- 
tations for  the  forty  years  were  between  four  and  five  hundred  millions. 
1  should  have  said  between  three  and  four  hundred  millions,  and  that  the 
duties  were  fifty  millions.  I  have  not  tabulated  it,  but  we  made  an  esti- 
mate of  our  regular  importations  and  the  regular  duty,  and  I  figured  it  up 
this  morning  as  amounting  to  just  about  that. 

I  annex  herewith  copies  of  four  invoices  and  memoranda,  called  by  the 
Custom  House  officers  fraudulent  and  duplicate  invoices,  marked  respect- 
ively A  and  B,  C  and  D,  E  and  F,  G  and  H. 

The  first  is  an  invoice  by  the  Calabria,  dated  October  5!3,  1871,  for 
i£4,073  3s.  6^.,  marked  A,  and  the  memorandum,  with  the  copies  of  two 
bills,  marked  B  and  B'.  The  first  of  these  shows  that  three  items,  desig- 
nated by  a  *,  and  included  both  in  the  invoice  and  memorandum,  are  invoiced 
at  £i1,  and  entered  in  the  meriioranda  at  £A1  158.  Id.,  an  alleged  under- 
valuation of  15s.  Id.  The  second,  B\  shows  that  one  item,  §,  invoiced  at 
i£20  14s.  should  have  been  entered  ^£21  5s.,  an  undervaluation  of  lis. 

The  second,  an  invoice  per  City  of  Antwerp,  dated  October  9,  1871,  for 
iB5,114  19s.,  marked  C;  and  memorandum,  with  copies  of  three  bills, 
marked  D  and  D'  D'.  The  first  of  these  shows  that  five  items,  *,  are  in- 
cluded in  both  invoice  C  and  memorandum  D;  that  four  of  the  items  are 
entered  at  the  same  price  in  invoice  and  memoranda.  The  other,  desig- 
nated by  a  §,  is  invoiced  at  £9Q  16s.,  and  entered  in  the  memorandum  at 
i2102  18s.,  an  undervaluation  of  £Q  2s.  Another  memorandum,  D^,  shows 
three  items  marked  f,  included  in  both  the  invoice  and  memoranda,  in- 
voiced at  i^43  15s.,  entered  in  the  memorandum  at  £45  lis.  lOd.,  an  under- 
valuation of  £i   16s.   lOd, 

The  third,  an  invoice  per  Calabria,  November  27,  1871,  for  iE4,007  10s. 
6c?.,  marked  E  and  memorandum  F;  seven  items,  designated  by  a  *,  are 
included  in  both  the  invoice  and  memorandum,  and  are  entered  at  the  same 
price  in  each.  The  original  memorandum  or  duplicate  invoice,  equally 
fraudulent  with  the  other,  was  examined  by  Mr.  Jayne,  and  bears  at  the 
bottom  the  word  and  initials,  "  Correct,  B.  G.  J.,"  in  his  handwriting. 


46  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

The  fourth,  an  invoice  per  Algeria,  March  15,  1812,  for  ^£7,322  5s.  6c7., 
marked  G  and  memorandum  H;  the  three  items  designated  by  a  *,  in- 
cluded in  botli  invoice  and  memorandum,  invoiced  at  i^27l  18.9.,  are  entered 
in  the  memorandum  at  £270  13s.  2d.,  an  overvaluation  of  .£1  4s.  lOd. 

The  four  invoices  contain  one  hundred  and  eighty-six  items,  with  nine- 
teen items  common  to  both  invoice  and  memoranda  ;  nine  are  invoiced 
below  memorandum  price,  seven  at  the  same  price  in  each,  and  three  are 
invoiced  above  the  memorandum  price. 

The  total  amount  of  the  two  invoices  in  which  there  are  undervaluations 
is  £9,188,  or  $4G,000  gold.  These  undervaluations  amount  to  £9  4s.  11^^., 
or  $46.50  gold.  The  duties  on  the  amount  of  undervaluation  were 
about  $9.20,  and  for  these  alleged  fraudulent  undervaluations  of  one  fifth 
of  one  per  cent,  on  the  amount  of  the  two  invoices  they  were  forfeited  to 
the  Government. 

These  four  invoices  were  taken  at  random,  without  selection,  and  are,  I 
believe,  fair  samples  of  the  whole. 


A. — Invoice  of  tin  plates  shipped  on  hoard  the  steamship  Calabria,  Captain  McMicken,  for  New 
York,  by  order  and  on  account  and  risk  of  Messrs.  Phelps,  Dodge  db  Co.,  New  York. 


Pontymlster  (P.,  D.  k  Co.) 


Poutymister  (L.  k  Co.)- 


Cookley  (K   <WS  ). 


Radnor  (P.,  D.  &  Co.). 


Saudon  (P.,  D.  &Co.). 

E.  C.  C.  (P.,  D.  k  Co.) 

Pen(P.,  D.  b  Co.)... 
N 


Pontymieter  (P.,  D.  k  Co. 
§Wilden(C.  E.) 


2,496  boxes  tin  plate  : 

5,  30,  28s 

70,  IX,  :«» 

10.IXW.308 

15.  1XX.388 

34,  100  sheets,  DXX,  339 

6.  225  sheets,  16  x  16,  IX.  GOs... 
1.  225  bheetn,  16  x  16,  IXW.  558. 

II.  225  sheets,  18  x  18,  IX.  76s. .. 

4,  225  hheetd,  18  x  18,  JXW,  708. 
25,  112  sheetH,  14  x  20,  10,  28s. . . 

10.  14x20.  IX.  333 

yo.  14x20.  IXX.  378 

20,14x20,  IXXX,  428 

y,  20x28,  IC,  56s 

75,  Terue,  IC,  25« 

6.  Terue.  IX.  308 

6.  Terue,  20  x  28,  IC.  50s 

20,  Terue,  20  x  28,  JX,  608 


415 


1,  D7X,  60j..,. 

96.  D5X.  50s 

79,  D4X,  458.,.. 
21,  IXXXX,  438. 


197 


*3.  31x44,  IXXXX,  IGOs... 
♦2,  38i  X  27i.  IXXXX.  1208. 
*1,  6bi  X  25,  IXXXX,  2208. . . 


430,  IC,  268  6d... 

42.  lew,  248  6d. 
177,  IX,  3l8  6d... 

16,  IXW,  288  6d. 

664 


150,  IC,  258  6d 

60.  12  X  12,  IC,  26s  6d. 

200 


311,Terne,  20x28,  IC,  488.. 
91,  Terue,  20x28,  IX,  688.. 


402 


280,  Coke,  11x11,  IC,2l8 

99,  Coke.  14  X  20,  10  (Wasters),  2l8.  6d. 


Discount  for  cash . 


Charges,  cartage,  porterage,  kc. 


£    a.  d, 

7    0  0 

116  10  0 

15     0  0 

28  10  0 

66    2  0 

15  0  U 
2  15  0 

41  16  0 

14  0  0 
S5     0  0 

16  10  0 
166  10  0 

42  0  0 
25  4  0 
93  16  0 

7  10  0 

15  0  0 
60    0  0 


3    0  0 

240    0  0 

177  15  0 

45    3  0 


0  0* 
0  0* 
0  0* 


215.216  boxes  No.  38  B.  T.,  4508.,  112  pounds,  22b. 
18.18boxesNo.  29B.  T.,  238 


Discount  for  cash. 


Charges,  cartage,  porterage,  ko. 


Commissioo,  2^  per  cent. 


569  15  0 
51    9  0 

278  15  6 
21    7  6 


191    6  0 
63  15  0 


746    8  0 
263  18  0 


294    0  0 
106    8  6 


3,857 
154 

1  6 
69 

8,702  16  9 
21  14  9 

236  10  0 
20  14  0§ 

257    4  0 
10    6  6 


246  18  6 
2    7  6 


£     $.  d. 

3,724  10  6 


249    6  0 


3,973  16  6 
99     7  0 


4,073    3  6 


(E.  K)    LiVEBPOOL,  October  23,  1871. 


PHELPS,  JAMES  k  CO. 


B. —  Copy  of  John  Knight  &  Co.'s  invoice,  dated  Octuher  17,  1871. 


^ 


Cookley,  K. 


1,  44x31,  XXXX,  50a 445  pounds. 

1,  44  X  31,  XXXX.  50s 446  pounds. 

1,  45x31.  XXXX,  538 473  pounds. 

1,  38^  X  27i,  XXXX,  fils 343  pounds. 

1,  88i  X  -27?,,  XXXX,  b1* 352  pounds. 

1,  65  j  X  25,'  XXXX,  598 632  pouuda. 

6  2,691 
=    Pap'ered.                                                                                               =^= 

Six  boxe!>,  weighing  1  ton  4  hundred  weight  3  pounds,  at  398.  9d £47  15«.  Id.* 


B^ — Copy  of  E.  P.  <fc  W.  Baldwin's  invoice,  October  9,  1871. 


Wllden(C.  E.).... 


18  boxes  B.  B.  shepts,  colored,  rolled  and  annealed,  17  x  12  x  29,  23  cwt.  1 

qr.  1  lb.,  at  178.  6d 

Tin  cases.  Is 


£    a. 

20    7 
0  18 


Delivered  iu  Liverpool.     Discount,  3  per  cent,  for  cash. 
Arr.  per  Calabria,  October  23,  ISTl. 


CITY  OF  ANTWERP,  S.  S. 

Invoice  of  goods  shijjped  on  hoard  the  steamship  City  of  Antwerp,  Captain  Eynon,  for  New  York, 

or  del  and  on  account  and  risk  of  Messrs.  Phelps,  Dodge  &  Co.,  New  York. 


Pontymister,  (P.  D.  k  Co.) 


Do. 


Do. 


<^. 


Do (L.  &G.). 


Camanron,  (N.  E.  J.). 


2,436  boxes  tin  plates: 

48,10,288 

5u,  IX.  33s 

9,  IXXX,  478 

13,  100  sheets,  DXX,  33s 

11,  100  sheets,  DXXX,  388 

20,  14x20,  IX,  33s 

6,  20x28,  I  (J,  668 

40,  225  sheets,  13  x  13,  IX.  38s. . . 

7,  225  sheets,  13  x  13,  XW,  35s., 
17,  225  sheets,  18x18,  IX.  768. . , 

2,  225  sheets,  18  xl8,  XW,  70s 

260,  Terne,  IC,  25s , 

5,  Terne,  IX,  30s 


488 

13, 

2, 
13, 

3, 
11. 

2, 
13, 

2, 

59 


*44, 
"*2 
*20i 
§44, 
♦4, 

161 


112  sheets,  13x13, 
112  sheets,  13  x  13, 
112  sheets,  14  xl4, 
112  sheets,  14  x  14, 
112  sheets,  17  x  17, 
112  sheets,  17  x  17, 
112  sheets.  18  x  18, 
112  sheets,  18x18, 


IXXXX,  29s 

IXXXXW,  25s.  6d. 
IXXXX,  34s.  3d... 
IXXXXW,  303.  3d. 

IXXXX,  51s 

IXXXXW,  45s 

IXXXX,  57» 

IXXXXW,  50s.  3d. . 


112  sheets,  UK  x  11  %,  IXXXXX,  27s,  6d.  for 
112  sheets,  548.  9d,  fur  225  sheets 

112  sheets,  11^x11^.  IXXXXXW,  248.  6d. 
for  112  i-heeta,  488.  9d.  for  225  sheets 

112  sheets,  13x13,  IXXXXX,  32s 

112  sheets,  13  x  13,  IXXXXXW,  288.  6d 

112  sheets,  14  x  14,  IXXXXX,  37s.  9d 

.112  sheets,  16  x  16,  IXXXXX,  49s 

112  sheets,  16  x  16,  IXXXXXW,  43s.  9d.. . . 


18,  11  X  11,  IXXXX, 

94,  DXXX,  408 

30,  DXXXX.  456...,. 
16,  DXXXXX,  508. . 

168 

53,10x20,10,388,. 
6.10x20.  ICW.  36b 


69 


£  s. 

d. 

67  4 

0 

82  10 

0 

21  3 

0 

21  9 

0 

20  18 

0 

33  0 

0 

16  16 

0 

76  0 

0 

12  5 

0 

64  12 

0 

7  0 

0 

325  0 

0 

7  10 

0 

18  17 

0 

2  11 

0 

22  5 

3 

4  10 

9 

28  1 

0 

4  10 

0 

37  1 

0 

5  0 

6 

120  9 

0 

7  6 

3 

70  8 

0* 

2  17 

0* 

37  15 

0* 

96  16 

OS 

8  15 

0* 

44  2 

0 

188  0 

0 

67  10 

0 

40  0 

0 

100  14 

0 

10  16 

0 

Powys,  [P  ,  D.  &  Co.) 

S.  B.,(P..  D.  k  Co.) 

Llaufalr  <^ 

Do (P.,  D.  &0o.) 

Howard   ^^ 

Do....(P..D.  kCo.).... 

Bute (P.,  D.  &  Co.).... 

0.  F.,  (P.,  D.  kCo.) 


Cymro,  (P.,  D.  Co.) 

Cum-du,  (P.,  D.&Co.). 


Pontymiater.  (P.,  D.  k  Co.) 
Do.... (J.  D.  &Co.).. 


27,  112  sheets,  20x28,  IX,  678 

33.  225  sheets,  18x18,  IX.  76s 

£  s. 
90    9 
125    8 
179    8 

15  0 
10  10 
10  10 

16  4 

19    2 

37  19 

6  15 

218  15 
176    4 
101  10 

39    8 
1  12 

9    2 

362  17 

17  12 
1    8 

352  10 

46    0 
6    6 
6  18 

12  12 
166    8 

66    0 

8  15 

13  2 

21  17 

d. 
0 
0 
0 

0 
0 
0 

6 

6 
6 
0 

0 
3 
9 

0 
0 

0 

0 
6 
6 

0 

0 
0 
0 
0 
0 

0 

Ot 
6t 
6t 

92,  225  sheets,  13  X  13,  IX,  398 

152 

5,  112  sheets,  20  x  28,  IX,  (Wasters)  GOs 

3,  225  sheets,  18x18,  IX.  (Wasters)  TOs 

6,  225  sheets,  13  x  13,  IX,  (Wasters)  35s 

14 

11,  coke,  9  X 18,  IC,  225  sheets,  298.  6d 

17,  coke,  ICW,  229.  6d 

\ 

31,  coke,  i4  X  20,  lO,  24s.  6d 

6,  coke,  14  X  20,  ICW,  22s.  6d 

54 

100,  coke,  11  x22.  IC,  226  sheets,  438.  9d 

107,  coke,  U^a  X  19,  IC,  225  sheets,  328.  9d 

66,  coke,  10  X  20,  IC,  225  sheets.  Mi.  3d 

263 
29,  coke,  14  X  22, 10,  27s 

1,  coke,  14x22,  lew,  32».  

30 
7,  coke,  14x22,10,268 

354,  coke,  U  x  11,  IC,  20s.  6d 

15,  coke,  14  x20,  IC,  2;is.  6a 

1,  coke,  14x20,  IX,  288.  6d 

370 

300,  coke,  14x20, 10,  23s.  6d 

40,  coke,  IC,  23s 

6,  coke,  ICW,  2l8 

6,  coke,  12x12,  IC,  238 

12,  coke,  12x12,  ICW,  218 

136,  coke,  14x20,  IC,  238 

200 

_60,  No.  38,  112  pouQds  B.  T.,  460  sheets,  22s. . 

tlO,  No.  30,  18  X  24,  B.  T.,  178.  6d 

tl5.  No,  33,  lix  17,  B.  I'.,  17s.  6d 

t25,  No.  33,  14  X  20,  B.  T.,  17s.  6d 

60 

Dlsoouut  for  cash 

3,692  16 
147  14 

6 
3 

3.645    2 
21  13 

3 
6 

£      K.     d. 
3,666  16    9 

1,316  IS    0 

6C0  ingots  common  Eoglish  tin  ff.  B.  k  Co.) 

Cwt.  Qrs.  Lbs. 
200  ingots  28  pounds  each .  50      2        3 
100  iugots  56  pounds  each .  50      3       9 

300 

200  ingots  28  pounds  each. 50      2        5 
100  iugots  56  pouuds  each  .50      2      22 

202      2      11  at  £134 
Discount  for  cash 

1.357    8 
40  14 

2 
8 

(F.O.B.) 

Commissiou  2Ja  per  cent 

4,990    4    0 
121  16    0 

6,114  19    0 

B.  L. 

Freight  ou  155X  tons,  at  'iOs. 
Per  cent,  primage 


£  s.   d. 

155  15  U 

7  15  y 


(E.  E.)    LiTKBPOOii,  October  9,  1871. 


PHELPS,  JAillilS  &  CO. 


D. 

£     ».   d 

*44  boxes  Pontymister,  112  Bbeetf,  l:i  X  13  XXXXX  tin  platep,  32s 7u    8    0* 

*  2  boxes  charcoal,  112  sheet,  13  x  13  XXXXX  tin  piates,  'JS-i.  licl 2  17    t.* 

♦20  boxes  charcoal,  112  sheets,  14  x  14  XXXXX  tin  plates.  378.  9d 37  15    0* 

§42  boxes  charcoal,  112  sheets,  16x16  XXXXX  tin  plates,  4'Js 102  18    0§ 

*  4  boxes  charcoal,  112  sheets,  16  X  16  XXXXX  tin  platen,  43-^.  9d ..  8  15    0* 

112  <^ 

Discount  on  £222  IBs.,  at  3  per  cent C  13    G 

Dibcount  on  £222  138.,  atl  per  tent 2    4    U 


£    s.  ./. 
222  13     (J 


Per  City  of  Antwerp,  October  9, 1871. 


213  15    U 


D. 


Corrected  invoice,  Messrs,  Phelps,  James  k  Co.,  0.;tober4,  1871. 
44  boxes  Pontymister,  112  sheets,  11>^  x  11  a  XXXXX  tin  plates,  27s.  6d. 
3  boxes  charcoal,  112  sheets,  ll>^xll>i  XXXXXW  tin  plates,  2ls  6d... 
2  boxes  charcoal,  112  sheets,  16  x  16  XXXXX  tin  plates,  iSa 


"<5> 


CO  10    0 

3  13     6 

4  18     0 


t  10  boxes  charcoal,  112  sheets,  B.  T.  30,  24x18,  14cwl.  Iqr.  24lbs.,  18>» 18    6    4t 

t  15  boxescharc.al,  112  sheetH,  B.  T.  33,  17x  12,    9          2        16          19s.  6d 9    8    Of 

t  25  boxes  charcoal,  112  sheets,  B.  T.  33,  2U  x  14.  21          0       23          19a,  6d..., . .  20  13    6t 
J.  D.  &  Co.,  50  tin  cases.  Is 2  10    0 

50 

Discount  on  £114  13s.  4d.,  at  3  per  cent 3  89    9 

Discount  on  £114  13s.  4d.,  at  1  per  cent 1     2  11 


City  of  Antwerp,  Liverpool,  October  9,  1871. 


4  11 


110    1    8 


CALABRIA,  S.  S. 

Invoice  of  tin  plates  shipped  on  hoard  the  steamship  Calabria^   Captain  McMicken,  for  New 
Yurk,  by  order  and  on  account  and  risk  of  Messrs.  Phelps,  Lodge  &  Co.,  New  York. 


Pontymister  (P.,  D.  &  Co.) 


2,406  boxes  tin  plates  : 

25,  14x20,  IC,  28s 

5,  14x20.  IX,  338 

74.  14x20,  IXX,  37s 

5,  20x28,  IX,  66.S 

17,  12x12,  IXX,  388 

2,  12  x  12,  IXXW,  358.... 
30,  100  sheets,  DXX.  33s. 

5,  200  8heet.«,  SDXX,  55s 

54,  19x19,  IXX,  508 

11,  19x19,  IXXW,  46s..., 
210,  Terne,  IC,  268 

438 


£ 

s.  d. 

35 

0  0 

8 

5  0 

136  18  0  1 

16 

10  0 

32 

6  0 

3  10  0  1 

49 

10  0 

13  15  0  1 

135 

0  0 

26 

6  0 

273 

0  0 

Pontj  mister  (R.  S.  &  Co. 


Do....(L.  4  G.).... 


M.  r.  (P.,D.  kCo.)... 
Sandon  (P.,  D.  &  Co.). 


B.  C.  N.  (P.,  D.  4  Co.).. 
Teuby 

Harold  (P.,D.  &  Co,).... 
T4ff 


*  4.  112  sheets  UxU, 
*10,  112  sheets  16x16, 

*  1,  112  sheets  16x16, 

*  7,  112  sheets  18  x  18. 

*  1,  112  sheets  18x18, 

*  9.  112  sheets  21  x  15, 

*  1,  112  sheets  21x15, 


IXXXXXX,  418.  6d.... 
IXXXXXX,  53s.  6d.... 
IXXXXXXW.  48s,  3d.. 

IXXXXXX.  698 

IXXXXXXW,  628.  3d.. 

IXXXX.  558 

IXXXXW,  488.  6d 


58. 
37, 
65. 

18. 

168 


50, 

100, 

25, 

175 

100, 

280 
22 

302 

270. 

1*20. 


DXXXXX,  509. 
DXXXX,  459. . 
DXXX.  403.... 
IXXXX.  608... 


Terne,  IC,  278. 


IC,  268 

14  X  20,  10,  268. 
12  X  12,  IX,  318. 


coke,  IC, 268. 


coke,  10x20.  10,358... 
coke,  10  X  20,  CW,  328. 


coktt,  10x20.  IC,  358. 
coke,  10x20.  IC,  338. 


Discount  for  caih 

Charges,  cartage,  porterage,  etc. 

23  capks  old  >crip  lead  (Sparrow) 
Cwl.  Qr$.  Lb$. 
2M      0      8  gross. 
11      2    27  tare. 


Discount. 


218      1      4  net  at  £17  12  6. 


(F.O.  B.) 

Commlaalon,  2>^  per  cent. 


£  s.d. 

8    6  0* 

26  15  0* 

2  8  3* 
24    3  0* 

3  2  af 
24  15  0* 

2    8  6* 


145  0  0 

83  6  0 

110  0  0 

64  0  0 


1,080    0  0 

66    0  n 

130    0  0 

38  16  0 


180    0  0 


490    0  0 
85    4  0 


472  10  0 
198    0  0 


3,852  12  0 
164    2  C 


192    7  3 
4  16  S 


£    f.d. 
3,C9K  lU  0 


187  11  0 


3,909  15  6 
97  15  0 


4,007  10  6 


(E.  E.)    LrvKBPOOL,  November  27,  1871. 


PHELPS,  JAMES  &  CO. 


B.  L.  £    s.  d. 

Freight  on  158  tons  at  208 15M    0    0 

Primage 7  18    0 


165  18    0 


F. 
Messrs.  Pbelpb,  James  k  Co.,  Liverpool,  November  22, 1871. 

£    g. 

*  4  boxes  Pontymister,  112  sheets,  14  x  16  XXXXXX  tin  plates,  4l8.  6a 8    6 

•10  boxes  Pohtyraister,  112  sheets,  16  X  16  XXXXXX  tin  plates,  539   6d 26  16 

*  1  box  Pontymister,  112  sheets,  16x16  XXXXXXW   i in  plates,  488.  3d 2     8 

*  7  boxes  Poutymieter,  112  sheets,  18  X  IH  XXXXXX  tin  plates.  698 24    3 

*  1  box  Pontymister,  112  sheets.  18x18  XXXXXXW  tin  plates,  62s.  3d 3    2 

*  9  boxes  Pontymister,  112  sheets,  21  x  15  XXXX  tin  plates,  558 24  15 

*  1  box  Pontymister,  112  sheets,  21  xlSXXXXWUn  plates,  488.  6d 2    8 

83      R.  8.  &  Co.'s 

October  28.    Discount  on  £91  18s.,  at  3  percent 2  15 

Discount  on  £91  188.,  at  1  per  cent 18 


£    s.  d. 

91  18    2 


3  13     6 


Per  Calabria,  November  25.    Correct,  P.  G.  J. 


4    6 


Invoice  of  goods  shipped  mi  board  the  steamship  Algeria,  Capi.  Le  Messuriet  ^  foi'  New  York^  by 
order  and  on  account  and  risk  of  Messrs.  Phelps^  Dodge  &  Co.,  New  York. 


Dean  (P.,  D.  k  Co.). 


Powys  (P.,  D.  &  Co. 


S.B.  (P.,  D.  &Co.). 


P,  M. 


Bradley  (B.  &  Co.) . 


Sandoii(P.,  D.  &C'o.). 


B.C.  N.  (P.,  D.  &  Co.)... 


Bangor  (P  ,  D.  &  Co.). 


T.  D. (coke) 


A.  C.  (P.,  D.  &  Co.). 


L.  F.  (P.,  D.  &  Co.). 


4,220  boxes  tin  plates  : 

330,10,  33s 

46,1CW,318 

88,  IX,  398 

17,  IXW,  368 

65,  14x20,  10,  338 

81,  14  X  20.  IX,  388 

112,  12x12,  IX,  38s 

9,  12  X  12,  IX  SV,  35s 

748 

20,10,  338 

12,  IX,  38s 

11,  12x12,  IX,  388 

10,  11x11,10,  298 

53,  11x11,  IX,  34s 

2,  13x13,  IX.  42s 

108 

3,  12x12,  IX,  35s 

3,  11x11,  10,  278 

8,  11x11,  IX,  32s 

2,  13x13,  IX,  39s 

16 

468,I0W,3l8 

94,  IXW,  368 - 

40,  14x20,  IXW,  368 

602 

*21,  D8X,  1808 

*  9,D6X,  154s 

*  4,  D3X,688 

34 

300,10.318 

15,  lOW,  29s 

150,  IX,  368 

15,  IXW,  33s 

200,  14x20,  IX,  36s 

5,  14  X  20,  IXW,  33s 

685 

50,  coke,  12  x  12, 10,  308. .. , 

5,  coke,  12x12,  10 W,  288.. 

55 

86,  coke,  10,  29s.  6d 

30,  coke,  10  X  20,  10,  428.  6d, 

116 

6,  coke,  IX,  338 , 

2,  coke,  IXX,  38s 

3,  coke,  IXXX,  43s , 

3,  coke,  13  xl3,  10,  3l8.... 

4,  coke,  DXXX,  40b 

200,  coke,  10  x  20, 10,  438. .. , 
20,  coke,  10  x20. 10,  40s.... 

220 

35,  coke,  10  X  20,  10,  4l8.... 


£ 

*.  d.\ 

544  10  0  1 

71 

6  0 

171  12  0 

30  12  0 

107 

6  0 

153  18  0  i 

212 

0  0 

15  15  0  { 

1 

33 

0  0 

22  16  0 

20  18  0 

14  10  0 

90 

2  0 

4 

4  0 

5 

5  0 

4 

1  0 

12  16  0 

3  18  0 

725 

8  0 

169 

4  0 

72 

0  0 

189 

0  0* 

69 

6  0* 

13 

120* 

465 

0  0 

21  15  0  1 

270 

0  0 

24  15  0  1 

360 

0  0 

8 

5  0 

75 

0  0 

7 

0  0 

126  17  0 

63  15  0 

9  18  0 

3  16  0 

6 

9  0 

4  13  0  1 

8 

0  0 

430 

0  0 

40 

00 

71  15  0 

£  8.  d. 

B.  V.  (P.,  D.  &Co.) 

36,  coke.  10.  298.  6d 

51  12  6 

554  12  0 

99    0  0 

376,  coke,  14  x  20,  IC.  29r.  6d 

72,  coke,  14  x  20,  CW,  278.  6d 

483 

C.  F.  (P..  D.  &  Co.) 

300,  coke,  14  X  20,  IC.  29«.  6d 

442  10  0 

36,  coke,  14  x  20,  CW,  27s.  6d 

49  10  0 

336 

fllantawe  (P.,  D.  &Co.)... 

130.  coke,  TC,298.  6d 

191  15  0 

220,  coke,  14  x  20,  IC,  298.  6d 

324  10  0 

350 

Cynon(P.,  D.  &  Co.) 

35,  coke,  IC,  29h 

50  15  0 

324  10  0 

21  12  0 

224,  coke,  14x20,  IC,  29« 

16,  coke,  14x20,  CW,  278 

275 

Fenian  (P.,  D.  &Co.! 

139,  coke,  14  x  20,  IC,  298.  6d 

205    0  6 

7,070    5  0 

Discount  for  cash 

282  16  0 
6,787    9  0 

Charges,  cartage,  porterage,  etc 

36  17  9 

£    *.  'I. 

W.  (P.,  D.  &Co.) 

13  bundles  sheet  iron.  84  x24  x  16. 
13  bundles  sheet  Iron,  84  x  26  x  16. 

6.824  6  6 

12  bundles  sheet  iron.  84  x  28  x  16. 

12  bundles  sheet  iron,  84  x  HO  xi6. 

12  bundles  sheet  Iron,  84x24x17. 

12  bundles  sheet  Iron,  84  x  25  x  17. 

13  bundles  sheet  Iron,  84  x  28  x  17. 

13  bundles  sheet  Iron,  84  x  30  x  17. 

17  bundles  sheet  iron,  84  x  24  x  18. 

17  bundles   sheet  iron,  84  x  26  x  18. 

17  bundles  sheet  iron.  84  x  28  x  18. 

17  bundles  sheet  iron,  84  x  30  x  18. 

25  bundles  sheet  iron,  84x24x19. 

25  bundles  sheet  iron,  84x26x19. 

26  bundles  sheet  iron,  84  x  28  x  19. 

25  bundles  sheet  iion,  84  x  30  x  19. 

25  bundles  sheet  iron,  84  x  24  x  20. 

25  bundle?  shetrt  tron,  84  x  26  x  20. 

25  bundles  sheet  iron,  84  x  28  x  20. 

26  bundles  sheet  Iron,  84  x  30  x  20. 

368                             Tons,  cvot.  Ibt. 

=                                 20      6      12  at  £8  16 

177  13  G 

W.  (P.,  D.  &  Co.) 

33  bundles,  84  x  24,  No.  22. 
60  bundles,  84  x  24,  No.  23. 

200  bundles  84  x  24,  No.  24. 

- 

Weighing  14  tons,  7  cwt.,  1  qr..  13  lbs.,  at  £10  Ss. 

147    5  6 

324  19  0 

Discount 

8    2  6 

316  16  6 

Charges,  cartage,  etc 

2  10  9 

319    7  3 

. 

7,143  13  9 

Commission  2^  per  cent 

178  11  9 

7,322    6  6 

(E.  E.)    LiYEBPOOi..  March  16,  1872. 


PHELPS.  JAMES  k  CO. 


B.  L.  £   f.  d. 

Freight  on  260%  tons,  at  208 260  15  0 

Primage — '. 26    1  6 


286  16  6 


H. 


Maboh  15. 


ALGERIA  S.  S. 

Bradley,  B.  4  Co.,  34  cases  tin  plates: 

Cwti.  qrs.  Ibx.  Sheets. 

*21,  4Ux  19x18.  G 107      1     11 1070* 

*9,  4ll  X  19  X  20,  G 39      2      5 530* 

*4,  25j  X    9  X  23,  G 7      3      2 501* 

—        "  £    s.d. 

34  154    2    18,  at  359.,  delivered  in  Liverpool. .  .270  13  2 

December  26. 
£    s.d. 

We  invoiced  21  boxes,  at  180s 180    0  0 

9  boxes,  at  1548 69    6  0 

4  boxes,  at  688 " 13  12  0 


271  18  0 


Tabular  statement  derived  from  the  foregoing  invoices  and  memoranda. 


Invoices. 

a 
a 

i 

1 

p<ag 

III 

Memoranda    price 
of   items  in    in- 
voice and  memo- 
randa. 

1 
1 

•a 

6 

s 
t 

CO 

o 

-3 

Is 

til  ^ 

go- 
< 

A.    

$20,365  00 
25,570  00 
20,035  00 
36,611  00 

$235  00 

1,301  25 

458  50 

1,359  50 

$238  75 

1,341  00 

458  50 

1,353  25 

$6  50 
39  75 

$4,073  00 
4,114  00 
4.007  00 
7,322  00 

%l  30 
7  94 

(j , 

E 

G 

Total 

$102,581  00 

$3,364  25 

$3,391  50 

$46  25 

$19,516  00 

9  24 

AX  EXTRAORDINARY  HISTORY.  55 


CROSS-EXAMINATION  AND    REHEARING  BEFORE  THE  COMMIT- 
TEE OF  B.  G.  JAYNE. 

The  hearing  of  the  representatives  of  the  several  Boards  of  Trade  and 
Chambers  of  Commerce,  and  also  of  individual  merchants  before  the  Com- 
mittee, having  been  concluded  on  the  10th  of  March,  B.  G.  Jaync  was  re- 
called and  resumed  his  statement.  From  the  official  report  of  this  state- 
ment and  the  accompanying  examination  of  Jayne  by  the  Committee,  are 
derived  the  following  extracts  relative  to  the  case  of  Phelps,  Dodge  &  Co.  : 

Mr.  Roberts. — Have  you  taken,  in  any  case,  any  books  or  papers  other 
than  those  bearing  directly  upon  the  charges  made,  and  of  which  notice 
had  been  given  ? 

Mr.  Jayne. — It  has  been  the  intention,  sir,  in  every  case  to  confine  our- 
selves strictly  to  books  of  that  kind.  We  have  been  very  careful  in  every 
case  to  take  none  but  the  commercial  books  of  the  house.  It  is  very  diffi- 
cult to  tell  whether  a  book  relates  to  a  particular  importation. 

Mr.  Roberts. — So  that,  in  fact,  then,  you  have  taken  other  books  than 
those  bearing  on  the  case  ? 

Mr.  Jayne. — We  have  found  that  some  books  that  we  have  taken  did  not 
have  the  entries  in  pertaining  to  the  importations.  That  is  true.  It  has 
not  been  the  intention,  however. 

Mr.  Roberts. — What  use  have  you  ever  made  of  any  books  or  papers, 
including  entries,  other  than  those  bearing  on  the  particular  case? 

Mr.  Jayne. — Where  I  have  found  entries  upon  the  same  pages  of  the 
books,  and  part  of  the  same  general  transaction,  we  have  frequently  in- 
cluded them  for  recovery.  We  have  used  nothing  except  it  came  from 
the  book  which  had  the  account  of  the  importations  in  it  to  which  the 
warrant  referred. 

Mr.  Roberts. — Do  you  say,  then,  you  have  not  made  any  use  of  any 
other  papers  ? 
-     Mr.  Jayne. — I  think  not,  sir. 

Mr.  Roberts. — Have  you  in  any  case  forced  a  settlement,  or  attempted 
to  do  so.  by  any  other  inference  than  the  recital  of  the  penalties  of  the  law  ? 

Mr.  Jayne. — No,  sir  ;  never. 


Note. — As  pertinent  to  this  latter  testimony  of  Jaync,  and  as  illustrative 
of  the  character  of  the  individual  to  whom  the  administration  of  Custom 
House  law,  in  an  important  department  in  this  great  City  of  New  York  was 
for  some  years  entrusted,  attention  is  here  asked  to  a  portion  of  the  speech 


56  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

before  the  Committee  of  Ways  and  Means,  during  the  hearing  in  question, 
by  Charles  Brainerd,  Esq.,  of  New  York. 

After  detailing  the  working  of  the  customs  laws  in  respect  to  certain 
cases,  in  which,  as  counsel,  he  had  defended  and  justified  certain  import- 
ing houses  in  New  York  City,  and  in  which  the  agency  of  arbitrary  treat- 
ment and  "terrorism"  had  been  very  systematically  resorted  to,  Mr. 
Brainerd  continued  : 

"  I  think  I  have  now  exhibited  the  system  precisely  as  it  is.  James 
Otis  described  the  practice  with  surprising  accuracy.  Let  me  read  his 
description  : 

" 'Custom  House  officials  may  enter  our  houses  when  they  please;  we 
are  commanded  to  permit  their  entry.  Their  menial  servants  may  enter; 
may  break  locks,  bars  and  everything  in  their  way;  and  whether  they 
break  through  malice  or  revenge,  no  man,  no  court  can  inquire.  Bare  sus- 
picion without  oath  is  sufficient.' 

"  The  description  fails  in  but  one  thing.  Then  bare  suspicion  without 
the  oath  that  you  are  suspicious  is  sufficient.  Now  bare  suspicion  with 
the  oath  that  you  are  suspicious  is  quite  enough. 

"Mr.  Jayne,  the  special  agent,  was  examined  before  the  Senate  Committee 
of  1872  in  the  City  of  New  York.  I  ask  this  Committee,  whose  members 
liave  exhibited  such  an  interest  in  this  matter,  to  read  what  he  says  about 
threats,  to  remember  where  he  makes  them,  and  in  what  connection  ;  to 
read  again  carefully  the  familiar  testimony  that  he  gave  in  the  presence  of 
gentlemen  who  were  then  protecting  the  system.'' 

From  this  sworn  evidence  let  a  portrait  of  a  special  agent  be  drawn. 

Fii'st  Let  us  take  the  famous  handcuff  story,  as  cautiously  related  by 
the  shrewd  agent;  and  I  beg  the  Committee  attentively  to  note  the  char- 
acter of  the  answers  made  by  the  special  agent.  They  are  curious  and 
important,  as  showing  by  their  omis.^ions  and  equivocations,  and  their  play 
upon  words,  the  real  secrets  of  this  business,  and  the  sinister  modes  by 
which  it  is  actually  carried  on  : 

iVew  York  Cttstom  Home  Investigation — Senate  Doc.  227,  42d  Congress,  2d  Session,    Vol  II, 

p.  524-5. 

"  Q,  Mr.  Bayard. — Tlion  the  use  of  handcuffs,  or  the  threat  of  handcuffs,  is  that  consid- 
ered by  you  a  legitimate  method  of  obtaining  information  upon  which  to  base  the  seizure  of 
merchants'  books  and  papers  ? — A.  It  might  be  legitimate,  to  make  men  tell  the  truth,  to  lay 
them  down  to  remind  them  that  they  might  be  used. 

•'Q.  Are  you  willing  to  state  to  the  Committee  further  the  extent  to  which  you  have 
acted  upon  the  fears  of  men  in  compelling  them  to  give  you  information  to  use  in  order  to 
prosecute  your  suits? — A.  Those  have  been  done,  sir,  to  a  very  limited  extent.  A  man  who 
has  been  guilty  of  doing  wrong  generally  fears. 


AN  EXTRAORDINARY  HISTORY.  57 

'•  Q.  Now,  tell  us  the  niKn  who  you  were  interrogating  and  seeking  to  terrify,  at  the  time 
you  had  this  unexpected  aid  from  the  authority  of  the  marshal,  with  the  pair  of  liandcuffs. — 
A.  I  think  there  was  no  one  at  that  time  in  my  office.  I  don't  think  they  were  left  there 
for  that  purpose  at  all. 

"  Q.  Did  you  not  state  that  you  had  a  man  under  examination,  and  that  some  one  came 
in  and  put  down  a  pair  of  handcuffs  beside  him  without  saying  anything,  or  without  your 
ordering  it  ? — A.  I  didn't  say  that.     I  said  such  a  case  might  have  occurred. 

"Q.  What  made  you  say  that?  Did  such  a  case  occur? — A.  I  presume  such  a  case 
might. 

•'  Q.  "What  idea  had  he ;  that  you  were  interrogating  this  timid  witness  ? — I  think  he 
brought  him  to  me. 

"  Q.  Was  he  there  during  all  that  time? — A.  I  think  he  was  outside  most  of  the  time. 

"  Q.  At  what  stage  of  the  tcrriflcation  did  he  come  in  with  the  handcuffs  ? — A.  I  couldn't 
say.  I  think  he  came  in  during  the  time  that  I  was  examining  the  witness.  I  don't  know 
at  what  stage  ;  I  could  not  say. 

"  Q.  How  often  did  yo\i  actually  put  those  handcuffs  on  anybody,  or  any  number  of  men? 
— A.  I  never  put  them  on  any  man  in  my  life. 

"Q.  Who  put  tliem  on  in  your  presence? — A.  I  don't  think  any  man  ever  put  them  on  in 
my  presence. 

"  Q.  That  you  swear  to? — A.  I  swear  that  I  have  no  knowledge  of  their  ever  having 
Ijcen  put  on  a  man  to  terrify  him. 

"  Q.  Did  you  put  them  on  to  encourage  him,  if  not  to  terrify  him  ? — A.  1  think  not  for 
any  such  purpose,  I  think  I  have  unlocked  the  handcuff  and  put  it  on  mj'  wrist  to  see 
how  it  worked,  but  not  to  terrify  him. 

"  Q.  If  you  didn't  put  them  on  to  terrify  him  or  encourage  him,  what  did  you  put  them  on 
him  for? — A.  I  couldn't  put  them  on. 

"  Q.  What  did  you  put  them  on  your  own  wrist  for? — A.  To  see  how  the  handcuff 
worked.     To  see  how  it  opened  and  how  it  locked. 

"  Q.  And  you  hero  swear  that  no  man,  to  your  knowledge,  was  ever  handcuffed  in  your 
office? — A.  According  to  the  best  of  my  knowledge  and  belief  there  has  not  been,  to  my 
recollection,     I  don't  recollect  any  such  case. 

"  Q,  Do  you  know  the  name  of  the  individual  who  had  this  little  suggestion  made  to  him 
by  the  laying  of  a  pair  of  handcuffs  down  by  Chalker,  when  you  were  examining  him? — A. 
I  don't,  sir. 

'*  Q.  Who  was  the  next  case  when  the  same  suggestion  was  made? — A.  Well,  sir,  I 
couldn't  tell  you. 

"  Q.  When  was  the  third  case  ? — A.  I  couldn't  tell  you.  sir.  I  never  kept  any  book  ac- 
count or  record  of  them, 

"  Q.  You  didn't  make  a  record  of  this  transaction  ? — A.  No,  sir ;  I  don't  think  it  has  oc- 
curred very  often." 

Second.  Following  his  use  of  handcuffs  for  purposes  of  moral  suasion, 
let  us  take  a  specimen  of  his  ethical  argument.^,  {Id.  p,  532): 

"  Q.  You  saj'  you  have  threatened  these  men  with  punishment  if  they  did  not  give  you 
information  ? — A.  I  may  have  done  so ;  I  presume  I  have. 

''  Q.  Do  you  not  know  it,  sir?  The  question  of  the  presumption  of  the  thing  within  your 
own  knowledge  is  not  exactly  the  way  to  state. — A.  I  have  used  every  appliance  I  have 
deemed  legitimate  to  extract  the  truth  from  men  that  I  had  a  moral  certainty  in  my  own 
mind  had  been  committing  a  fraud  on  the  Government. 


58  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

'*  Q.  Now,  give  us  a  little  history  of  what  you  deem  legitimate  methods  of  extracting  tlie 
truth. — A.  By  sitting  down  first  and  reasoning  with  the  man,  and  telling  him  what  his 
better  course  would  bo — telling  him  what  a  wicked  fellow  he  had  been,  how  he  had  violated 
every  principle  of  manhood,  morality  and  official  honor,  had  been  defrauding  the  Govern- 
ment, a  party  to  a  fraud,  and  tliat  his  best  and  only  way  was  to  tell  frankly  just  what  he 
had  done.  Sometimes,  when  that  failed.  I  held  up  to  him  the  terrors  of  the  law,  read 
once  in  awhile  a  section  of  the  law  to  him,  and  of  course  it  might  bo  deemed  a  threat  or 
otherwise. 

"Q,  Have  you  exhausted  your  catalogue? — A.  I  do'nt  care  to  go  into  that  field. 

"  Q.  But  I  want  to  know  something  of  that  field. — A.  Well,  1  think,  unless  my  acts 
are  under  some  imputation  of  wrong,  it  is  not  necessary  for  me  to  take  each  case  in  detail. 

"  Q.  I  have  not  asked  you  for  that;  you  spoke  of  j-our  methods  of  obtaining  information, 
and  I  wanted  to  know  what  they  were,  and  if  you  now  stated  them  {ill. — A.  No,  sir;  I 
haven't  stated  all;  each  case  is  different;  it  depends  upon  the  man  who  sits  before  you. 
Sometimes  he  is  a  man  who  has  no  physical  fear;  again,  he  is  a  man  who  has  uo  moral 
fear,  that  has  no  moral  sense  of  wrong;  it  depends  upon  the  subject  you  liave  to  deal  with. 

"  Q.  Then  you  would  act  upon  either  as  the  case  would  bo  ? — A.  I  would  use  any 
method  that  I  would  deem  legitimate  to  get  at  tlie  truth,  to  get  bad  men  out  of  service, 
to  detect  any  fraud  upon  the  revenue  and  stop  it. 

"Q.  Am  I  to  understand  you  that  you  would  terrify  a  man  who  was  physically  a  timid 
man? — A.  I  might. 

"  Q.  Did  you? — A.  I  presume  I  have. 

"  Q.  Do  you  know  you  have? — A.  I  presume  there  are  men  in  New  York  who  think  I 
am  a  terrible  fellow. 

"  Q.  I  ask  you  if  you  have  terrified  men  in  order  to  obtain  testimony  from  them? — A. 
Quite  likely.     I  wasn't  the  keeper  of  their  feehngs  and  couldn't  know  all  their  emotions. 

"  Q.  Have  your  arguments  been  altogether  of  a  moral  or  mental  nature  ? — A.  T  find,  in 
nine  cases  out  of  ten,  when  you  show  a  man  the  exact  position  he  stands  in,  that  you  can, 
by  treating  a  man  properly,  appeal  to  their  consciences  and  show  to  them  that  they  liave 
done  a  great  wrong." 

Note  this  question  and  the  reniarkuble  answer: 

"  Question.  Now,  give  us  a  little  history  of  what  you  deem  legitimate  methods  of  ex- 
tracting the  truth. 

"  Answer.  By  sitting  down  first  and  reasoning  with  the  man  and  telling  him  what  his 
better  course  would  be ;  telling  him  what  a  wicked  follow  he  has  been,  how  he  has  been 
violating  every  principle  of  manhood,  morality  and  official  honor,  has  been  defrauding  tl»e 
Government,  a  party  to  a  fraud,  and  that  liis  best  and  only  way  was  to  tell  frankl}^  just 
what  he  had  done.  Sometimes,  when  that  failed,  I  lield  up  to  him  the  terrors  of  ihc  law 
(this  means  handcuffs  and  Sing  Sing);  read  once  in  awhile  a  section  of  the  law  to  hinii 
and,  of  course,  it  might  be  deemed  a  throat  or  otherwise." 

Mr.  Brainerd. — The  courtly  senator,  Mr.  Bayard,  said  at  this  point,  "  Have 
you  exhausted  your  catalogue  ?"  and  the  superexcellent  special  agent  re- 
plied— what?  "I  don't  cure  to  go  into  that  field."  The  house  that  paid  $271,- 
000  knew  what  it  was  to  go  into  that  field.  The  men  who  saw  Mr.  Jayne, 
who  heard  him  talking  about  Sing  Sing  and  Clinton,  and  saw  him  shutting 
and  opening  the  .handcuffs  upon  his  own  wrists,  did  not  care  to  go  into 


AN  EXTRAORDINARY  HISTORY.  59 

that  field  either,  but  they  were  compelled  to  do  so,  and  came  down.  Of 
course  they  came  down.  Does  he  say,  "  Conscience  doth  make  cowards  of 
us  all  ?"  Shakspeare  lived,  and  the  special  agent's  reading  occurred  at 
a  period  far  anterior  to  the  adoption  of  the  seizure  law  of  1863.  Con- 
science might  have  made  cowards  of  merchants  then,  but  capital — con- 
fronted by  a  special  agent,  who  can  publish  to  the  world,  after  he  has 
grabbed  your  books,  that  you  are  liable  in  $1,700,000 — '^capital  now 
makes  cowards  of  us  all."  So  they  say  to  their  attorneys,  even  if  he  is  not 
in  league  with  the  special  agent,  "  Find  out  how  much  you  can  hush  this 
up  for,  because  we  shall  be  ruined  wherever  we  are  known."  And  to  this 
day  merchants  to  whom  I  have  referred  have  not  fully  recovered  the  ground 
lost  by  the  grab  of  their  papers  which  was  made  in  1869. 

The  following  further  extract  from  Juyne's  examination  by  Senator 
Bayard,  in  1872  {Id.,  p.  517),  shows  the  reason  for  seizing  the  whole 
mass  of  books  and  papers  in  a  counting  room  : 

"  Q.  You  may  give  any  statements  about  this  case  3-ou  please,  but  I  prefer  yoti  to 
answer  my  question  in  regard  to  the  whole  of  your  matters — whether  or  not  you  had 
used  testimony  unknown  to  you  when  you  flrst  seized  the  books  and  papers,  and  which  was 
not  inchided — touched  matters  not  embraced  in  your  charge  to  compel  settlements  of  those 
parties? — A.  Do  you  mean  other  charges  witli  regard  to  other  goods  wliero  the  same  kind 
of  frauds  liad  taken  place? 

'•  Q.  Whether  you  over  made  your  investigation  or  the  discovery  of  one  fraud  the  basis  of 
compelling  settlements  of  others  which  you  did  not  know  of  at  the  time  you  were  searching 
out  the  first? — A.  I  will  say  to  the  Senator,  very  frankly,  that  when  I  take  the  books  and 
papers  called  for  by  the  warrants,  and  when  I  find — if  I  find  any  kind  of  fraud  against  the 
revenue — I  should  take  advantage  of  that  fact ;  or,  in  other  words,  if  I  was  fishing  for  buU- 
lieads  and  caught  a  trout  I  wouldn't  throw  him  back  into  the  creek. 

*'  Q.  You  have,  I  think,  put  a  very  proper  simile  in  reference  to  your  business,  that  you 
regard  it  as  fishing  when  you  go  into  a  merchant's  books  and  papers? — A.  Not  at  all,  sir; 
I  never  go  on  fishing  excursions. 

"  Q.  Nevertheless  you  do  fish,  and  oatoh  other  things  than  you  went  for? — A.  If  I  had 
evidence  that  a  fraud  upon  two  importations  of  a  partioubr  kind  has  been  committed,  and  in 
getting  possession  of  a  man's  books  and  papers  I  find  that  tliose  books  disclose  that  he  has 
committed  the  same  kind  of  ft-auds  upon  other  importations,  I  certainly  include  them. 

"  Q.  You  say,  tlien,  that  you  never  abandoned  the  first  charge  that  you  seized  the  books 
on,  and  took  a  new  one,  which  you  discovered  in  t}>e  books  on  one  of  those  fishing  excur- 
sions, as  you  liave  described  it  ? — A.  I  have  included  in  the  stiUeraent  made  to  the  collector 
and  to  the  district  attorney  cases  that  were  not  mentioned  in  the  warrants.  I  have  done  it 
frequently,  I  presume ;  how  frequently  I  don't  know." 

Mr.  Brainerd. — 'In  other  words,  the  proceeding  is  inquisitorial  and  secret. 
The  plan  is  to  make  a  prima  facie  case,  on  information  and  belief,  to  obtain 
the  warrant;  the  marshal  under  it  takes  all  he  can  lay  his  official  hands  on, 
and  then  the  special  agent  goes  through  the  case.     He  may,  to  apply  his 


60  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

chaste  language,  have  started  out  under  the  pretence  of  fishing  for  "  bull- 
heads," but  he  is  really  fraudulently  employing  this  extraordinary  process 
to  catch  "trout." 

Note  the  special  agent's  mode  of  obtaining  testimony  {Id.,  529,  529)  : 

"  Q.  Have  you  paid  merchants'  clerks  or  tlie  book-keepers  of  merchants  in  order  to  ob- 
tain information  of  their  employer's  business  ? — A.  I  have  paid  money  for  information 
wherever  I  deemed  it  legitimate. 

"  Q.  Will  you  answer  the  question  ? — A.  I  have  paid  money  to  merchants  for  informa- 
tion that  they  have  given  me  with  regard  to  other  merchants.  I  have  paid  money  to  men 
employed  for  the  truth. 

"Q.  Will  you  answer  my  question,  Mr.  Jayne? — A.  I  have. 

"  Q.  I  bog  your  pardon,  but  you  have  not  answered  it  as  it  was  asked. — A.  I  have  paid 
money  to  merchants  ;  never  to  any  merchant  for  information  he  had  in  his  own  books,  but 
with  regard  to  others. 

"  Q.  I  ask  you  the  plain  question,  and  I  think  the  effect  upon  you  will  be  for  you  to 
consider  in  this  published  testimony.  I  ask  you  if  you  have  paid  for  information  to  the 
clerks  or  book-keepers  of  merchants  for  information  touching  the  affairs  of  their  emploj^ers? 
— A. .  Well,  I  have  paid  money  wherever  I  thought  I  could  get  at  the  truth. 

"  Q.  I  want  you  to  answer  me  that  question.  [To  the  Chairman.]  Mr.  Chairman,  I 
must  say  tliat  I  have  been  compelled  by  this  witness  to  repeat  questions  of  a  very  plain 
character,  which  no  man  should  be  deceived  about,  in  which  a  witness  so  astute  as  Mr. 
Jayne  has  no  difficulty  whatever  in  answering;  and  he  has,  as  you  see,  avoided  me  in 
every  way,  I  think  the  witness  should  bo  instructed  by  the  Committee  that  our  time  is 
not  to  be  taken  up  in  this  way, 

"  The  Chairman. — The  witness  will  please  answer  the  question. 

"  Witness. — Mr.  Chairman,  allow  me.  There  are  instances  m  which  the  employes  of  cer- 
tain importers,  or  former  employes,  have  given  me  facts  ;  in  all  such  cases  it  was  under  the 
solemn  assurance  that  their  names  should  never  be  revealed,  and  I  don't  propose  to  answer 
ai'iy  question  that  will  discover  the  name  of  any  man  who  has  given  me  information  that  I 
have  promised  not  to  disclose.  I  should  consider  myself  very  dishonorable  to  give  a  man 
away  in  that  manner, 

"  The  Chairman. — The  question  was  not  in  regard  to  the  name. 

"  Mr.  Bayard. — There  has  been  no  such  suggestion  made,  Mr,  Chairman,  and  therefore 
the  pretext  of  the  witness  will  scarcely  be  deemed  as  honorable  as  he  would  desire.  [To 
the  witness.]  There  has  been  no  suggestion  to  ask  you  the  name  of  any  one.  It  will  be 
quite  time  enough  for  you  to  raise  the  objection  when  the  question  is  asked.  Whenever 
you  are  ready  to  answer  my  question  you  may. — A.  Repeat  the  question. 

"  Q.  I  ask  you  whether  you  have  paid  clerks  and  book-keepers  of  merchants  for  infor- 
mation touching  the  business  of  their  employers,  and  the  private  business  of  their  em- 
ployers?— A,  I  have  paid  them  with  regard  to  the  business  of  their  employers  in  regard  to 
importations ;  that  is  not  private  business. 

"  Q.  Tlien  you  have  paid  them  in  regard  to  business  transactions  of  merchants  who  em- 
ployed them  ? — A,  Exactly, 

"Q.  That's  been  one  of  your  methods  of  obtaining  testimony? — A.  It's  been  testimony 
that  I  have  never  used  in  court  or  elsewhere. 

"Q.  How,  sir?— A,  In  court  or  elsowJiere,  except  as  it  pointed  the  direction  in  whicli  I 
could  find  certain  facta. 


AN  EXTRAORDINARY  HISTORY.  61 

"  Q.  In  other  words,  because  you  had  promised  not  to  give  up  the  names  of  the  witnesses — 
of  the  informers — you  were  tlierefore  not  able  to  disclose  it,  and  bring  him  in  court,  but  you 
used  the  information  you  obtained  from  him  to  guide  you  to  obtain  other  information  that 
you  could  bring  in  court  ? — A,  pjxactly. 

"Q.  That's  the  method?— A.  That's  it,  exactly. 

"  Q.  And,  therefore,  you  did  use  their  testimony  to  convict  their  employer  ? — A.  I  used 
their  testimony  to  point  the  direction  of  fraud. 

"  Q.  It  was  quite  as  essential  to  get  that  as  to  get  what  followed? — A.  And  I  deemed  it 
entirely  legitimate. 

"  Q.  That  has  been  part  of  your  system  here  in  New  York  ? — A.  My  system  has  been  to 
discover  the  frauds  on  the  revenue  in  any  way  whatever  that  I  could  legitimately. 

•'Q.  Among  those  metliods  has  l)een  that  purchasing  of  testimony  from  clerks,  book- 
keepers, of  all  tliat  went  on  in  their  employer's  establishment  ? — A.  I  never  have  except 
when  they  came  to  me  voluntarily. 

"Q.  You  have  undertaken  to  give  us  a  statement  of  what  you  have  received  so  far  since 
June,  1869,  as  your  share  of  the  informer's  receipts,  being  about  $125,000? — A.  Yes,  sir. 

"Q.  And  you  have  been  compelled  to  pay  others  portion.^  of  that? — A.  I  have  paid 
others ;  yes,  sir. 

"Q.  Are  those  people  connected  with  the  Custom  House? — A.  Yes,  sir;  some  of  them 


Here  are  three  pleasing  proofs  of  the  purity  of  this  system  : 
(1.)  The  confessed  bribery  of  merchants'  clerks. 
(2.)  The  confessed  bribery  of  one  merchant  against  another. 
(3.)  The  confessed  sharing  of  the  informer's  portion  of  the  moiety  with 
officers  of  the  customs,  who  were  not  legally  entitled  to  anything. 

Mr.  Brainerd. — 1  thought  the  language  of  Mr.  Curran,  in  one  of  his  fam- 
ous orations,  was  florid  and  overdrawn  when  he  spoke  of  the  informer,  and 
the  witness  who  is  one  of  his  products,  as  **  the  wretch  that  is  buried  a 
man,  but  who  lies  till  his  heart  has  time  to  fester  and  dissolve,  and  is  then 
dug  up  a  witness,"  but  I  now  know  that  this  description  is  not  overdrawn  ; 
and  correspondingly  strong  language  can  justly  be  applied  to  the  oflficial 
who  resorts  to  practices  described  in  the  extracts  1  have  quoted,  for  the 
purpose  of  instituting  and  maintaining  the  inquisitions  to  which  we  are 
now  objecting. 

It  seemed  tome  (and  I  now  refer  to  "the  pivotal  case"),  when  men 
whose  names  have  been  the  synomyn  of  everything  that  is  noble  and  great 
in  mercantile  life,  were  grabbed  by  the  throat  on  the  allegation  that  they 
had  defrauded  the  Government  out  of  $1,600  of  duties,  and  were  held 
liable  for  $1,700,000  forfeitures,  that  it  was  a  hard  case,  but  the  judgment 
of  the  special  agent  is  otherwise. 


62  CONGRESS  AND  PHELPS.  DODGE  &  CO. 


RESUMPTION  OF  B.  G.  JAYNE'S  EXAMINATION,  MARCH  10th, 

1874. 

Mr.  Roberts. — Your  interest  to  the  extent  of  the  share  of  the  moiety  is 
involved  in  the  decision  of  the  Secretary,  and  sometimes  that  is  very  large. 
Have  you  done  anything  in  any  way  to  induce  the  Secretary  to  decide  one 
way  or  the  other  ? 

Mr.  Jayne. — I  have  not,  except  in  cases  where  I  have  recommended  that 
the  sum  offered  be  accepted. 

MR.  JAYNE  EMPLOYS  GEN.  BUTLER. 

Mr.  Roberts. — Have  you  in  such  cases  done  anything  except  submit 
your  recommendation  for  settlement  ? 

Mr.  Jayne. — No,  sir. 

Mr.  Roberts. — You  have  not  sent  counsel,  or  done  anything  of  that  sort? 

Mr.  Jayne. — Well,  sir,  in  one  case  I  did  employ  counsel.  I  employed 
counsel  on  account  of  the  element  which  entered  into  the  case,  as  1  told 
you.  I  went  directly  to  the  Secretary  of  the  Treasury  with  those  facts, 
and  I  employed  counsel.  The  men  who  had  entered  into  that  scheme, 
which  I  thought  was  entirely  dishonorable,  were  men  of  such  character 
that  I  thought  it  wa^  proper  for  me  to  employ  counsel,  and  I  did  so. 

Mr.  Roberts. — You  say  "  that  scheme  ;"  what  do  you  mean  by  that? 

Mr.  Jayne. — A  man  had  come  to  my  office  and  given  information  against 
a  house.  It  appears  that  there  had  been  a  burglary  in  that  house  some 
time  previous  to  that,  and  this  man  who  came  to  my  office  to  give  infor- 
mation against  the  house  employed  as  counsel  for  hiiuself  the  same  man 
who  had  defended  the  parties  who  had  committed  the  burglary.  During 
the  pendency  of  that  cas.e,  and  after  an  offer  of  settlement  had  been  made, 
that  attorney  came  to  my  room,  at  the  Astor  House,  one  morning  early, 
and  called  me  up.  He  stated  to  me  that  he  or  his  clients  were  in  posses- 
sion of  certain  personal  letters,  which  had  been  written  by  a  member  of 
the  firm,  and  some  which  had  been  received  by  a  member  of  the  firm,  that 
had  nothing  whatever  to  do  with  their  violations  of  the  revenue  law.  I 
listened  to  him  until  he  had  told  his  story  through,  and  said  to  him,  "  This 
has  nothing  to  do  with  the  case  of  the  United  States  against  them  for  vio- 
lation of  the  revenue  law  ;  and  now,  sir,  you  have  placed  me  in  the  posi- 
tion that  no  further  negotiations  can  go  on  in  this  case,  by  or  through  me, 
until  this  entire  element  is  eliminated  from  this  case  ;  and  I  shall  imme- 
diately send  for  the  attorney  and  counsel  for  this  firm,  and  shall  notify 
them  that  you  have  come  to  rae  with  this  proposition,  and  that  you  have 


AN  EXTRAORDINARY  HISTORY.  63 

told  me  that  you  have  threatened  a  nieraber  of  that  firm,  and  I  will  join 
them  in  a  prosecution  against  you  for  attempting  to  black  mail  this  firn), 
unless  you  deliver  those  letters  up  between  now  and  six  o'clock  this  even- 
ing." Before  the  appointed  time  the  letters  were  brought  to  me,  and  a 
member  of  that  firm  came  to  my  room,  and,  in  presence  of  counsel  and 
attorney  of  the  firm,  I  handed  them  over  to  him.*  I  refused  to  be  the 
medium  of  any  further  negotiations  in  that  case,  with  regard  to  terras, 
than  those  that  had  already  been  ofi'ered  previous  to  my  knowledge  of  this 
transaction.  In  that  case  I  did  employ  counsel,  because  the  parties  asked 
that  the  case  might  be  settled  on  the  terms  which  had  been  offered  pre- 
viously to  this,  and  1  did  deem  that,  if  they  wanted  to  settle  it,  it  was  a 
proper  case  to  be  settled  for  that  amount — that  is,  if  they  so  desired.  I 
employed  counsel  for  my  own  protection  in  that  matter.  I  wished  the 
judgment  of  some  other  man  with  regard  to  my  own  course.  I  obtained 
it,  and  I  paid  him  from  my  own  pocket. 

Mr.  Foster. — I  did  not  exactly  understand  the  answer  to  Mr.  Roberts' 
question.     You  employed  counsel  for  what? 

Mr.  Jayne. — I  deemed  that  it  was  a  case  where  some  ugly  points  might 
arise,  and  where  this  matter  might  come  up;  that  it  probably  would  come 
up  in  the  course  of  some  discussion  growing  out  of  this  case.  I  did  con- 
sent and  urge  settlement  of  this  case  for  a  sum  of  money,  that  the  counsel 
for  the  informer  was  not  willing  should  be  accepted.  I  deemed  that  some 
ugly  proceedings  might,  perhaps,  grow  out  of  this  attempt  to  black  mail. 

*  lu  ail  article  which  appeared  in  the  New  York  Graphic  of  May  11th,  1874,  and  which 
bears  upon  its  face  evidence  of  having  been  written  by  Jayne,  the  following  more  circum- 
stantial account  of  the  proceedings  in  reference  to  the  private  letters  alluded  is  given : 

"  Ou  tlie  morning  of  December  31  Mr.  Jayne  was  called  up  at  ki«  room  at  the  Aator  Houne  by  Dudley 
Fifcld,  one  of  tlie  counsel  of  Herve.  who  stated  to  Uim  that  certain  private  letters  written  und  rec<  ived  by 
a  member  of  tiie  firm  were  witliiu  biu  control,  and  that  be  Lad  8e<  n  tbut  member  of  the  firm,  and  stated 
to  bim  th  It  be  bad  control  of  these  letters,  and  that  the  firm  murt  n^ake  an  increased  offer  aud  pay  a 
largely  increased  sum  (so  au  to  produce  a  lar^^er  moiety  to  his  client,  the  iuformer,  Herve),  or  he  should 
make  them  public.  He  also  stated  to  Mr.  Jayne  that  he  had  seen  Judge  Fullerton  and  made  the  same 
btatemeut  to  him,  aud  that  Jud^^e  Fullerton  had  sent  Lim  to  Mr.  Knox.  Mr.  Jayne  immediately  in- 
formed Air.  Field  that  his  htalement  made  it  itupossible  for  the  Qovernmeut  officers  tu  exact  any  further 
sum  under  any  circumstances,  and  that  it  would  be  necessary  for  the  letters  to  be  given  up  to  their 
rightful  owner  belore  any  further  action  could  be  taken.  Mr.  Field  agreed  thereupon  to  have  the  letters 
sent  to  Mr.  Jayne  that  day  before  one  o'clock.  On  going  to  his  oifice  that  morniug  Mr.  Jayne  stated  to 
the  attorney  and  counsel  of  Phelps,  Dodge  k  Co.  what  had  transpired,  aud  that  he  could  take  no  fur- 
ther actiou,  and  should  in  no  case  proceed  until  these  letters  were  delivered.  The  attorney  and  counsel 
of  Phelps,  Dodge  &  Co.  left,  to  return  when  notified  of  the  possession  of  the  letters.  These  came  to 
Mr.  Jayne  in  a  package  about  noon  of  the  same  day,  when  he  notified  the  attorney  and  counsel  of  Phelps, 
Dodge  &  Co.  of  his  possession  of  the  letters,  and  it  was  then  agreed  that  Mr.  Wakeman  should  notify 
the  member  of  the  firm  to  whom  the  letters  belonged,  and  that  he  (Wakeman)  should  call  with  him  at  the 
room  of  Mr.  Jayne  aud  receive  them  at  six  o'clock  that  evening.  This  was  carried  out,  the  letters  being 
shown  to  no  person  except  the  attorney  of  the  firm,  and  only  to  bim  for  the  purpose  of  identification, 
and  to  be  certaiu  of  their  poAsessiou." 


64  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

I  thought  the  truth  might  come  out  and  I  might  need  counsel.  I  came 
with  the  facts  of  the  case  to  the  Secretary  of  the  Treasury,  and  to  counsel 
whom  1  employed. 

Mr.  Foster. — Then  I  am  to  understand  that  you  employed  counsel 
to  prevent  a  larger  sum  being  paid  by  Phelps,  Dodge  &  Co.  ? 

Mr.  Jayne. — 1  employed  counsel  to  secure  the  settlement  upon  the  terms 
that  they  offered,  and  seemed  anxious  to  close  upon. 

Mr.  Foster. — And  not  to  have  them  pay  a  larger  sum  ? 

Mr.  Jayne. — Not  to  have  them  pay  a  larger  sum. 

Mr.  Foster. — I  think  it  would  be  well  for  you  to  give  the  name  of  the 
counsel,  for  we  have  understood  that  he  was  employed  for  a  different  pur- 
pose. 

Mr.  Jayne. — General  Butler  was  the  gentleman,  sir.  He  was  not  em- 
ployed for  a  different  purpose. 

Mr.  Foster. — Has  he  been  employed  in  any  other  cases  with  you  ? 

Mr.  Jayne. — Whenever  I  had  questions  of  law  that  I  did  not  under- 
stand— and  in  the  course  of  my  experience  1  have  had  a  great  many 
quescions  of  law  and  of  evidence  arising — 1  have  submitted  a  number  of 
questions  to  General  Butler,  and  I  have  paid  him,  I  think,  $1,500  besides 
what  I  paid  in  that  case. 

Mr.  Foster. — How  many  cases  has  he  been  employed  in  ? 

Mr.  Jayne. — I  could  not  tell  the  exact  number  that  I  have  asked 
him  questions  with  regard  to.  I  should  think  two  or  three,  or  three  or 
four  perhaps. 


Mr.  Foster. — Now,  about  this  Woodruff  &  Robinson  case.  I  want 
your  judgment  as  to  the  propriety  of  their  paying  $50,000.  Do  you  think 
they  ought  to  have  paid  it  for  a  mere  irregularity?  You  stated  there  was 
no  intentional  wrong. 

Mr.  Jayne. — No,  I  do  not  state  that. 

Mr.  Foster. — I  understood  you  to  state  it. 

Mr.  Jayne. — No,  sir  ;  1  have  not  made  such  a  stitement. 

Mr.  Foster. — Do  you  think  there  was  an  intentional  wrong  ? 

Mr.  Jayne. — Well,  sir;  I  should  judge  that  there  was  not. 

Mr.  Beck. — In  connection  with  that  case,  what  became  of  the  penalty? 
Who  got  it  ? 

Mr.  Jayne. — There  is  no  one  who  has  got  it  yet,  that  I  know  of. 

Mr.  Beck. — Fifty  thousand  dollars  was  paid  ? 

Mr.  Jayne. — Yes,  sir. 

Mr.  Beck. — Has  neither  the  surveyor,  naval  officer,  nor  anybody  else  got 
any  part  of  it  ? 


AN  EXTRAORDINARY  HISTORY.  65 

Mr.  Jayne. — I  guess  not. 

Mr.  Beck.— Why  ? 

Mr.  Jayne. — I  suppose  it  has  not  been  distributed  yet. 

Mr.  Beck. — How  is  it  to  be  distributed  ? 

Mr.  Jayne. — 1  do  not  know. 

Mr.  Beck.— The  Government  gets  half  of  that  150,000  ? 

Mr.  Jayne. — Yes,  sir. 

Mr.  Beck. — And  then  don't  you  get  half  of  the  other  halt? 

Mr.  Jayne. — No,  sir. 

Mr.  Beck. — Who,  then,  does  ?  I  understand  the  surveyor,  naval  officer 
and  collector  gets  one  half  of  tlie  other  half  among  them  ? 

Mr.  Jayne. — Yes,  sir — they  get  one  quarter. 

Mr.  Beck. — The  Government  gets  one  half,  and  half  of  the  other  half  is 
distributed  to  those  three  men  ;  who  gets  the  other  quarter  ? 

Mr.  Jayne. — The  other  goes  to  the  man  who  gives  the  information. 

Mr.  Beck. — Is  that  you  ? 

Mr.  Jayne. — No,  sir. 

Mr.  Beck.— Who  is  it  ? 

Mr.  Jayne. — A  man  formerly  in  the  employ  of  Woodruff  &  Robinson. 

Mr.  Beck. — And  you  divide  with  him  ?  What  part  of  it  comes  to  you, 
and  what  to  him  ? 

Mr.  Jayne. — Well,  sir,  in  matters  of  that  kind,  whatever  they  offer  to  pay 
me. 

Mr.  Beck. — The  Secretary  pays  you  ? 

Mr.  Jayne. — The  Secretary  awards,  where  there  is  but  one  claim  put  in, 
to  the  man  who  makes  the  claim. 

Mr.  Beck. — And  the  claim  is  put  in  by  you  ? 

Mr.  Jayne. — Yes,  sir  ;  with  power  of  attorney  from  this  man. 

Mr.  Beck. — Then  what  part  of  it  belongs  to  you,  and  what  are  you  going 
to  pay  to  him  ? 

Mr.  Jayne. — Just  such  sum  as  he  sees  fit  to  allow  me  would  come 
to  me. 

Mr.  Beck. — Was  that  the  only  arrangement  you  have  with  him  ? 

Mr.  Jayne. — No,  sir. 

Mr.  Beck. — What  is  it,  then  ? 

Mr.  Jayne. — He  voluntarily  offered  to  give  me  one  third. 

Mr.  Beck. — One  third  of  his  fourth  ? 

Mr.  Jayne. — Yes,  sir. 

Mr.  Beck.— Therefore  $25,000  is  divided  among  the  officers— $12,500  to 
the  three  high  officers  ;  $12,000  comes  to  you  and  that  informer,,  of  which, 
he  gets  $8,000  and  you  get  $4,000  ? 

5 


66  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Ml'.  Jayne. — Yes,  sir  ;  tliat  is  it. 

Uv.  Beck. — You  had  the  information  before  Mr.  Moulton  ? 

Mr.  Jayne — It  had  been  filed  in  my  office  prior  to  that. 

A[r.  Beck. — Before  he  came  and  gave  you  that  information  at  all  ? 

Mr.  Jayne. — Yes,  sir. 

Mr.  Beck— And  that  fellow  is  to  get  $8,000  out  of  this  ? 

Mr.  Jayne. — Yes,  sir  ;  if  the  Secretary  gives  it  to  him. 

Mr.  Beck. — Now,  do  you  think  if  there  was  no  wrong  in  that  case, 
and  no  intentional  wrong,  that  it  would  be  right. to  pay  a  fellow  $8,000  for 
that  ;  is  that  your  idea  of  justice  and  fair  dealing  ? 

Mr.  Jayne. — I  have  not  said  it  was. 

Mr.  Beck. — Then  the   settlement  of  $50,000  is  wrong,  in  your  judgment  ? 

Mr.  Jayne. — I  think  they  have  paid  a  sum  of  money  in  excess  of  what 
they  should  have  paid  ;  that  is  my  opinion. 

Mr.  Beck. — And  certainly  18,000  to  a  man  of  that  sort  is  more  than  you 
think  he  is  entitled  to? 

Mr.  Jayne. — That  may  be. 

Mr.  Beck. — I  am  asking  your  opinion  of  it.  I  think  so  ;  I  have 
no  question  ? bout  it  ;  I  think  he  ought  not  to  have  anything  ;  but  I  am 
asking  you. 

Mr.  Jayne. — It's  only  a  question  of  what  the  law  is.  The  law  is  that 
the  Secretary  has  absolute  power  to  compromise  for  $10,000  as  well  as  for 
$50,000. 

Mr.  Beck. — Would  it  not  have  been  more  just  and  honest  for  the  repre- 
sentative of  a  Government  like  this,  when  there  was  no  intentional 
wrong,  and  the  officer  so  said,  to  have  taken  the  actual  amount  of 
loss,  than  to  have  mulcted  them  in  large  amount,  and  for  men  who  have 
done  no  service  ? 

Mr.  Jayne. — I  think  so,  sir.  I  am  not  here  to  defend  or  pass  judgment 
on  these  people. 

Mr.  Beck. — I  am  not  asking  that;  I  am  asking  your  opinion.  Is  it  not 
your  opinion  that  a  great  wrong  was  done? 

Mr.  Jayne. — Tt  is  my  opinion  these  men  have  paid  more  than  they 
should. 

Mr.  Beck.— Is  the  Court  bound  to  keep  that  money  now? 

Mr.  Jayne. — An  Act  of  Congress  can  take  it  out  of  the  Treasur}-  after  it 
is  once  in.     It  is  in  tlie  Treasury  now. 

Mr.  Beck. — Can't  he  take  out  $25,000  and  distribute  it  without  an  Act 
of  Congress? 

Mr.  Jayne. — Certainly  he  can  take  out  one  half  of  what  is  in.  That 
would  he  about  $24,000. 


AN  EXTRAORDINARY  HISTORY.  67 

Mr.  Beck. — Do  you  tliink,  with  a  full  presentation  of  the  case  as  made  by 
you  to  this  Committee,  that  the  Secretary  would  be  justified  in  paying 
$24,000  to  these  people,  or  subordinates  of  the  Government? 

Mr.  Jayne. — Well,  sir,  I  shall  not  insist  that  he  would  be,  by  any  sort  of 
means. 

Mr.  Beck. — Do  you  think  if  the  facts  had  been  known  in  the  Phelps- 
Dodge  case  that  the  overpayments  by  them,  which  have  been  developed 
here  to  a  very  large  extent,  when  the  underpayments  amounted  to  only 
$1,600 — do  you  think  if  the  amounts  they  have  overpaid  had  been  known 
at  the  the  time,  that  that  would  have  mitigated  the  amount  demanded? 

Mr.  Jayne. — I  do  not  believe  that  there  was  any  overpayment,  except  in 
this  way:  where  the  appraiser  raised  the  goods,  or  they  were  raised  to 
make  market  value  upon  the  entry.  I  found  no  case,  in  all  my  examina- 
tion of  their  books,  where  they  had  invoiced  their  goods  at  greater  prices 
than  they  paid  for  them — not  a  single  instance. 

Mr.  Beck. — Nor  where  they  were  raised  here  ? 

Mr.  Jayne. — Oh,  yes;  they  were  raised  here  upon  their  entries.  As  I  say, 
I  found  no  such  cases.  I  heard,  after  the  case  was  settled,  that  such  an 
element  existed.  I  feay  if  such  an  element  did  exist,  and  had  I  known  it 
at  the  time,  that  it  would  have  made  a  very  great  difference  with  regard  to 
my  opinion  in  that  case.  If  that  be  true,  that  they  over  invoiced  as  well  as 
under  invoiced,  it  would  make  a  very  different  case  with  regard  to  the  ap- 
parent intent  in  the  case. 

Mr.  Beck. — When  did  you  first  hear  of  that? 

Mr.  Jayne. — I  heard  of  it  after  the  case  was  settled. 

Mr.  Beck. — And  the  money  paid  and  distributed  ?  * 

Mr.  Jayne. — Yes,  sir. 

Mr.  Beck. — And  never  before. 

Mr.  Jayne. — I  never  heard  of  that  over  invoicing  until  I  saw  this  publica- 
tion. 

Mr.  Beck. — That  has  only  been  out  a  short  time,  has  itnot  ? 

Mr.  Jayne. — This  letter,  addressed  to  their  friends  and  the  public,  is 
dated  April  15,  1873.     It  probably  was  not  published  before  its  date. 

Mr.  Beck. — I  was  struck  very  much,  going  over  that  book  (of  yours),  with 
the  fact  that,  in  nearly  all  the  cases  you  cited,  it  (the  fraud)  was  done  by 
collusion  with  the  officers  of  the  Government. — A.  I  have  a  list  which  will 
show  you  the  exact  proportion.  I  made  out  a  list  of  them  to-day,  thinking 
a  question  of  that  kind  would  be  asked,  and  deeming  it  a  very  proper  mat- 
ter for  inquiry.  Thirty  of  the  cases  out  of  the  sixty-one  were  false  weights, 
obtained  by  collusion  with  United  States  weighers  or  employes  in  the  weigh- 
ers' department;  six  were  false  liquidations  or  false  classifications,  obtained 


68  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

by  collusion  with  Government  oflBcers;  nine  were  undervaluations.  In  one 
case,  at  least,  of  those  it  was  b}'  collusion  with  the  Government  officer. 
One  was  a  false  gauge  by  collusion  with  the  Government  officer;  nine  were 
false  classifications,  obtained  by  collusions  with  the  Government  officers; 
two  were  false  verifications  as  to  quantity,  obtained  by  tricks — by  devices; 
three  were  false  weights  and  false  damage  combined,  and  one  was  the  ware- 
house case,  with  regard  to  which  you  have  heard;  making  sixty-one  in  all. 

Q.  And  some  forty-six  of  them  were  by  collusion  with  officers? — A. 
There  were  about  fifty-two  or  fifty-three  of  them. 

Q.  In  one  form  or  another,  collusion? — A.  Yes,  sir. 

Q.  Have  any  of  these  Government  officers  been  punished  ? — A.  They  have 
been  sent  out  of  the  service — dismissed. 

Q.  And  kept  out  of  the  service  ? — A.  Yes,  sir. 

Q.  All  of  them  ? — A.  I  think  there  are  a  number  of  officers  in  the  service. 
It  is  not  my  fault,  sir. 

Q.  I  am  not  speaking  of  fault,  sir. — A.  I  wish  to  say  in  that  connection 
that  I  have  never  made  a  recommendation  for  dismissal  of  any  officer  from 
the  Government  service.*  I  have  assumed  that  it  was  no  part  of  the  func- 
tions of  a  special  agent  of  the  Treasury  Department  to  do  the  thinking  of 
other  people.     It  was  merely  his  business  to  present  the  facts. 

Q.  A  number  have  been  dismissed,  and  a  good  many  are  still  there,  you 
think  ? — A.  I  think  there  are  some  officers  there  wdio  should  not  be  there, 
and  a  good  many  have  been  dismissed. 

Q.  And  against  w^iom  you  have  reported  facts  of  collusion  to  the  Secre- 
tary ? — A.  A  number  of  them;  the  receipt  of  money 

Q.  That  is,  receiving  bribes — not  doing  his  duty,  I  suppose  you  mean? 
— A.  I  mean  that  men  have  got  their  goods  through  without  paying  the 
proper  duty. 

Q.  And  paying  something  to  the  officer  ? — A.  Yes,  sir.  And  if  the  officers 
had  done  their  duty  they  would  not  have  got  them  through. 

Q.  These  facts  you  have  reported  to  the  Secretary  of  the  Treasury  ? — A. 
Yes,  sir. 

Q.  And  these  men  the  Secretary  of  the  Treasury  still  keeps  in  office? — 
A.  Some  few  of  them  are  in  office. 

*  The  attention  of  the  reader  is  asked  to  a  comparison  of  tliis  testimony  of  Jayne's  with 
the  following  extract  from  the  testimony  of  the  same  witness  before  the  Congressional  Com- 
mittee in  1872: 

Q.  You  say  that  whenever  you  found,  in  the  whole  course  of  your  service,  that  an  officer 
had  been  guilty  of  fraud,  you  instantly  caused  his  arrest  ? — A.  I  instantly  caused  his  arrest 
or  removal. 

Q.  Or  removal? — Yes,  sir.  [Senate  Doc.  A2d  Congress^  p.  532.] 


AN  EXTRAORDINARY  HIbTORY.  69 

Q.  Is  it  possible,  under  any  law,  to  carry  on  the  office  of  Custom  House 
with  safety  to  the  Government  while  men  who  receive  bribes  are  kept  in 
office? — A.  No,  sir;  not  in  my  judgment.  And  I  look  upon  the  taking  of 
books  and  papers  of  commercial  houses,  and  compelling  them  to  pny  pcn- 
alt}',  while  the  thieves  inside  the  Custom  House  that  have  aided  them  are 
left  unmolested,  as  no  better  than  highway  robbery. 

Mr.  Wood. — Who  gave  you  the  first  information  in  the  Phelps-Dodge 
case  ? 

Mr.  JAYNfe. — I  wish  to  say  to  the  gentleman 

Mr.  Wood. — Please  to  answer  the  question. 

Mr.  Jayne. — I  wish  to  say  to  the  gentleman  and  to  the  Committee  that  I 
have  no  objection  in  that  case  to  answer  the  question;  but  in  any  case 
where  information  has  been  given  to  me  in  confidence,  and  where  my  name 
appears  opposite  the  sum  of  money,  I  shall  not  feel  at  liberty  to  give  the 
names  of  the  parties  who  have  brought  information  to  me.  The  courts  do 
not  permit  that  question  to  be  inquired  into,  and  I  do  not  deem  that  I 
should  be  doing  justice  to  other  men  to  state  these  facts  before  this  Com- 
mittee or  elsewhere.  But  in  the  Phelps-Dodge  case  a  man  who  had  been  in 
the  employment  of  Phelps,  Dodge  &  Co.,  by  the  name  of  Ilervey,  came  to 
me  with  his  attorney. 

Q.  That  was  the  first  information  that  you  had  of  anything  wrong? — A. 
That  was  the  first  information. 

Q.  Was  he  then  in  the  employment  of  the  firm  ? — A.  Not  then;  but  he 
had  been  in  the  employment  of  Phelps,  Dodge  &  Co. 

Q.  AVas  there  not  another  clerk  of  Phelps,  Dodge  &  Co.  who  also  gave 
you  information  ? — A.  Not  voluntarily.  I  suppose  you  allude  to  the  young 
man,  Kennedy.  Mr.  Kennedy  came  to  my  room  once  when  I  had  sent  for 
liim  to  the  house  where  he  lived.  He  said  to  me  substantially  this:  "I  am 
in  the  employment  of  Phelps,  Dodge  &  Co.;  if  I  knew  anything  with  refer- 
ence to  them  I  would  not  want  to  communicate  it;  I  know  of  nothing  which 
is  of  much  importance,"  and  he  gave  me  nothing  that  was  of  nmcli  import- 
ance. I  shall  crave  your  indulgence  to  make  an  explanation  with  regard 
to  that,  as  the  young  man's  name  has  been  mentioned  here,  and  as  I  am 
sure  that  Mr.  Dodge  would  not  like  to  do  any  young  man  a  wrong,  and  I 
certainly  would  not.  Mr.  Kennedy  was  to  receive  no  share  in  moiety;  he 
had  no  promise  of  anything  of  that  kind  in  any  way,  shape  or  manner;  but, 
after  the  case  had  been  closed  and  settled,  Mr.  Kennedy  came  to  my  office 
and  said  that  he  had  been  dismissed  from  the  service  of  the  firm,  and  that 
his  sister,  his  mother,  and  his  crippled  brother  were  in  want  in  consequence 
of  it;  and  that  as  one  of  the  incidents  of  the  examination,  a  cruel  suspicion 
had  fallen  on  him,  which   had  done  him   personal  wrong.     1  went  to  the 


70  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Collector  of  the  Port,  and  I  stated  to  him:  "  Here  is  a  young  man  who  has 
been  incidently  harmed  by  this  examination,  who  has  done  no  wrong.  I 
think  he  should  be  provided  for,  for  he  says  that  his  mother,  his  sister  and 
his  brother  are  in  want."  The  Collector  said  that  he  thought  there  would 
be  an  apparent  impropriety,  although  there  would  be  no  real  impropriety, 
in  appointing  him.  I  then  went  to  Colonel  James,  the  Postmaster;  told 
him  the  same  story,  and  made  application,  and  obtained  an  appointment 
for  Kennedy.  Previously  to  doing  this,  however,  I  had  paid  him  (simply 
because  he  came  to  me  and  said  that  he  was  in  want,  that  they  needed 
assistance  at  his  house,  and  that  he  had  been  wronged  by  the  operations 
of  this  law)  three  or  four  hundred  dollars  out  of  my  own  pocket.  I  gave 
it  to  him,  as  he  said  he  needed  it  for  the  wants  of  his  family.  These  are 
the  exact  facts  with  reference  to  that  young  man,  Kennedy. 

Q.  Did  you  know  at  that  time  what  position  Mr.  Kennedy  occupied  with 
Phelps,  Dodge  &  Co.? — A.  I  knew  from  Mr.  Hervey  that  he  was  an  as- 
sistant book-keeper  in  the  office  of  Phelps,  Dodge  &  Co. 

Q.  1  understood  you  to  say  that  you  sent  for  him? — A.  I  sent  for  him. 

Q.  Is  that  the  way  in  which  he  came  to  your  house? — A.  He  came  to 
the  Astor  House.  Mr.  Hervey  said  that  Mr.  Kennedy  was  knowing  of  cer- 
tain transactions  of  the  firm,  which  Mr.  Hervey  detailed  to  me  verbally. 
1  said,  "Will  this  young  man  come  and  make  a  statement  of  these  facts, 
that  I  may  verify  them  ?"  The  young  man  came,  and  the  statements  made 
by  Hervey  were  not  fully  verified  b}^  Kennedy. 

Q.  Then  Mr.  Kennedy  went  voluntarily  to  the  Astor  House  to  meet  you, 
and  you  afterward  sent  for  him? — A.  He  came  to  the  Astor  House  to  see 
me  once. 

Q.  How  often  did  you  see  him  during  the  progress  of  the  investigation  ? 
— A.  I  think  I  saw  him  but  once. 

Q.  And  he  then  gave  you  information  ? — A.  He  gave  me  no  information 
that  was  of  much  importance. 

Q.  Did  you  or  did  you  not  state  to  Mr.  Dodge's  attorney  that  you  knew 
of  every  transaction  that  was  going  on  in  that  concern  from  day  to  day  ? 
— A.  No,  sir;  I  never  said  so.  I  stated,  perhaps,  something  like  this:  That 
Mr.  Hervey  had  friends  who  communicated  with  him  concerning  transac- 
tions of  that  house.  I  was  perfectly  square  and  frank  with  the  attorneys 
of  Phelps,  Dodge  &  Co.  all  the  way  through  during  that  investigation. 
You  can  call  those  gentlemen  before  you,  and  let  them  say  whether  I  was 
or  was  not. 

Q.  Have  you  not  said  since  you  have  l)een  in  Washington  that  you  knew 
of  this  overvaluation  of  Phelps,  Dodge  &  Co.'s  invoices  ? — A.  I  have  not  so 
stated. 


AN  EXTRAORDINARY  HISTORY.  71 

Q.  Were  not  the  attorneys  of  Phelps,  Dodge  &  Co.  personal  friends  of 
yours? — A.  Mr.  Wakeman  had  been  formerly  Surveyor  of  the  Port  of  New 
Y'ork,  and  it  is  a  fact  that  Mr.  Wakeman  came  to  the  Custom  House  occa- 
sionally, and  I  have  gone  to  the  room  adjoining  my  office  and  taken  oysters 
with  him.  I  met  him  socially  frequently,  a  fact  which  Mr.  Dodge  knew 
before  he  employed  him. 

Q.  Did  not  Mr.  Wakeman  render  you  essential  service  in  obtaining  for 
you  that  appointment? — A.  He  did  not.  At  the  time  I  was  appointed  1 
had  never  seen  Mr.  Wakeman. 

Q.  Y^ou  did  not  know  him  at  all  ? — A.  I  did  not  know  him  at  all. 

Q.  Did  you  not  hear  from  the  attorneys  of  Phelps,  Dodge  <fc  Co.  that  they 
would  not  pay  these  men  until  they  knew  who  the  spy  was  whom  you 
had  in  their  store? — A.  No,  sir;  I  never  heard  such  a  statement  that  I  re- 
collect. 

Q.  Who  gave  you  the  information  that  Mr.  Stokes  was  burning  his 
papers? — A.  I  think  Mr.  Hervey  came  to  me  and  told  me  he  had  learned 
that  fact. 

Q.  You  are  quite  sure  that  it  was  not  Mr.  Kennedy  ? — A.  I  know  that  it 
was  not  Mr.  Kennedy. 

Q.  It  was  Mr.  Hervey,  who  was  a  dismissed  clerk  ? — A.  It  was  Hervey, 
a  dismissed  clerk. 

Q.  Was  there  any  other  person  in  the  employment  of  tho.=e  gentlemen  at 
that  time  whom  you  communicated  with  ? — A.  There  was. 

Q.  Who  were  they? — A.  One  was  Mr.  Whitelow,  who  came  to  my  room 
voluntarily. 

Q.  What  were  bis  duties  in  Phelps,  Dodge  <fe  Co.'s  office? — A.  I  cannot 
tell  you.  I  think  he  was  a  sort  of  messenger,  or  mail  clerk,  or  something 
of  that  kind. 

Q.  Was  he  then  in  their  employment  ? — A.  He  was. 

Q.  What  motive  had  he  for  telling  you  of  their  aflfairs  ? — A.  I  cannot  toll, 
except  that  he  was  a  friend  of  Mr.  Hervey. 

Q.  Then  through  Hervey  all  the  employes  of  the  concern  were  becoming 
gradually  demoralized  ? — A.  I  do  not  know  how  badly  they  were  becoming 
demoralized.  I  sought  nothing  from  any  of  these  men  save  the  truth,  and 
it  was  my  duty  to  learn  all  the  truth  I  could. 

Q.  Y''ou  have  already  stated  the  names  of  three  parties,  some  of  whom 
were  in  the  employment  of  Phelps,  Dodge  &  Co.  at  the  time  of  the  com- 
munications, and  some  of  whom  had  been  dismissed.  You  have  named 
three  parties  in  that  concern  whom  you  were  in  secret  communication  with 
in  regard  to  the  business  of  the  firm.  Now  I  wish  you  to  name  any  other 
that  you  can  remember. — A.  There  are  no  others. 


72  CONGRESS  AND  PHELPS,  DODGE  &  00. 

(4.  You  are  quite  sure  of  that? — A.  I  think  not. 

Q.  Be  very  careful  now,  because  I  liave  information  on  that  subject 
which,  probably,  you  have  not. — A.  (After  referring  to  some  papers.)  It 
was  charged  that  the  firm  of  Phelps,  Dodge  &  Co.  had  paid  a  sum  of  money 
to  a  damage  examiner,  and  that  the  money  had  been  paid  in  the  presence 
of  an  employe  of  the  firm,  by  the  name  of  Mr.  Frank  Heller.  Heller  was  in 
charge  of  the  warehouse,  as  I  should  judge  from  this  paper. 

Q.  What  paper  are  you  reading  from  ? — A.  lam  reading  from  an  affi- 
davit. 

Q.  Made  by  whom  ? — A.  Made  by  Heller.  It  was  charged  that  Heller 
was  present  when  money  was  paid  by  the  Custom  House  clerk  of  Phelps, 
Dodge  &  Co.,  Mr.  Moore,  to  a  damage  examiner,  who  had  been  examining 
some  Russian  sheet  iron.  I  called  Mr.  Heller  before  me.  I  sent  an  officer 
for  him  to  come  to  my  office,  not  secreth^,  but  in  the  day  time,  openly, 
knowing  that  the  firm  would  know  all  about  it.  I  questioned  him  in  refer- 
ence to  that  transaction,  and  he  made  his  statement,  and  I  have  here  his 
affidavit  with  reference  to  what  he  saw  and  what  he  knew  in  regard  to  that 
transaction.  It  was  in  order  to  confirm  or  contradict  the  statement  which  I 
had  received,  and  he  confirmed  it.  It  was  in  order  to  arrive  at  the  truth  in 
regard  to  the  charge  which  had  been  made  against  the  firm.  I  wanted  to 
arrive  at  the  truth. 

Q.  Had  this  charge  which  you  now  refer  to  any  connection  with  the 
charges  on  which  the  settlement  was  finally  effected,  or  was  it  separate 
and  distinct,  and  outside  of  them  entirely? — A>  If  you  will  rea,d 

Mr.  AVooD. — Answer  my  question,  yes  or  no  ;  I  want  you  to  give  me  an 
answer,  whether  it  is  included  or  not  included  in  the  settlement.  Among 
the  allegations  made  against  this  house,  on  which  that  final  adjustment  was 
made  by  the  payment  of  $271,000,  was  that  charge  included?  You  are 
making  a  charge  which  is  new  to  the  Committee. 

Mr.  Jayne — I  am  making  no  charge  at  all.  I  am  answering  questions, 
as  I  understand,  under  oath.  You  ask  me  a  question  which  is  better  an- 
swered by  a  letter  of  my  own,  written  to  the  Secretary  of  the  Treasury,  in 
which  I  stated  just  what  was  included  in  my  examination.  The  letter  is 
printed  in  the  pamphlet  published  by  the  firm.  It  is  as  follows:  "In  re- 
ply to  your  letter  of  the  22d,  making  inquiries  in  reference  to  what  was 
c  )vered  in  my  report  in  the  case  of  Phelps,  Dodge  &  Co.,  I  would  say  that 
my  investigation  covered  all  the  importations  of  that  house  for  five  years 
next  preceding  January  1,  18*13,  and  that  the  matter  called  to  the  atten- 
tion of  the  Department  related  to  the  under  valuation  of  merchandise,  as 
well  as  suspected  payment  of  money  for  damage  allowance  during  that 
period." 


AN  EXITIAORDINARY  HISTORY.  73 

Q.  This  affidavit  which  you  spoke  of  was  made  by  Hervey  ? — A.  No,  sir  ; 
by  Frank  Heller. 

Q.  Who  was  Frank  Heller? — A.  A  man  in  their  employ. 

Q.  He  there  refers  to  a  fourth  individual  guilty  of  bribing  a  damage  ex- 
aminer.— A.  Let  me  state,  so  that  you  will  not  misunderstand  me.  Among 
the  charges  made  against  this  firm  by  Mr.  Hervey  was  a  charge  that  that 
firm  had  made  payments  of  money  to  damage  examiners  in  the  appraisers' 
department  for  allowing  excessive  damage  allowances  on  Russian  sheet 
iron.  He  said  to  me  that  Mr.  Heller  was  present  at  the  time  when  one  of 
those  payments  was  made  to  the  examiner,  and  that  Mr.  Heller  would 
either  verify  or  contradict  his  statement.  I  thereupon  sent  to  the  ware- 
house of  Phelps,  Dodge  &  Co.,  and  had  Mr.  Heller  come  to  my  oflBce  (I  did 
it  in  the  day  time,  openly),  and  Mr.  Heller  made  his  statement. 

Q.  You  heard  Mr.  Dodge's  statement  before  this  Committee  ? — A.  I  did. 

Q.  This  is  the  same  case  which  he  referred  to  himself  as  the  Russian 
sheet  iron  case,  is  it  not  ? — A.  The  statement  of  Mr.  Dodge  may  have  been 
his  understanding  of  the  case,  but  the  charge  was  that  at  various,  different 
and  diverse  times  this  firm  had  paid  sums  of  money  to  the  damage  examin- 
ers in  order  to  induce  them  to  allow  greater  damages  than  had  actually 
occurred  on  the  voyage  of  importation;  that  these  sums  had  been  paid  by 
their  cashier,  Mr.  William  Dodge  Porter,  a  nephew  of  the  senior  of  the  firm, 
on  tickets  by  some  member  of  the  firm,  to  a  Mr.  Moore,  who  was  their 
Custom  House  clerk;  that  Mr.  Moore  had  disbursed  these  moneys  to  the 
damage  examiners;  that  the  payment  had  been  made  in  the  presence  of  Mr. 
Hervey,  and  that  one  of  them  had  been  made  in  the  presence  of  Mr.  Heller. 
He  called  particular  attention  to  that  one.  I  called  Mr.  Heller  before  me 
and  took  his  statement,  in  order  to  verify  or  contradict  this  statement  of 
Mr.  Hervey;  and  though  all  the  men  alluded  to,  including  Mr.  William 
Dodge  Porter,  the  nephew^  of  the  head  of  the  firm,  did  state,  on  their  oath, 
that  sums  of  money  had  been  paid  to  induce  excessive  damage  allowances, 
yet  I  could  connect  no  particular  transaction  with  any  particular  importa- 
tion. The  evidence  appeared  to  show  that  the  allowances  and  the  exami- 
nation of  those  goods  did  not  occur  until  three,  or  four,  or  five  weeks  after 
the  goods  had  gone  to  the  warehouse  of  the  firm  ;  that  they  kept  a  large 
quantity  in  the  storehouse,  and  that  when  the  iron  was  brought  in  there  it 
was  a  very  difficult  thing  to  examine  it  and  ascertain  the  exact  amount  of 
damage.  While  it  appeared  that  sums  of  money  were  paid  to  these  exami- 
ners, yet  I  was  unable  to  fasten  their  payments  on  any  particular  impor- 
tation, and  hence  no  importations  of  Russign  sheet  iron  were  included  in 
the  suit  against  the  firm. 

Q.  Have  vou  Mr.  Porter's  affidavit  there? — A.  I  have. 


74  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

Q.  Please  read  it  to  the  Committee. — A.  Let  me  state  that  this  affidavit 
was  written  in  the  office  of  Mr.  Porter,  and  on  his  own  paper,  at  his  place 
of  business.  Here  is  the  original.  I  went  to  his  store,  asking  questions, 
and  he  made  this  statement,  and  I  wrote  out  the  affidavit  and  he  signed  it 
and  swore  to  it,  or  rather  he  affirmed  that  it  was  true.  He  had  conscien- 
tious scruples  against  swearing. 

Q.  You  wrote  it  yourself? — A.  I  wrote  it  myself  from  his  statement. 

Mr.  Janye,  read  the  affidavit,  as  follows; 

•'United  States      ) 
•'  vs. 
*'  Phelps,  Dodge  &  Co.  \ 

"SouTHEKN  District  dp  New  York,  ss: 

"  William  D.  Porter,  being  examined,  affirms  as  follows:  that  he  resides  at  Orange  Valley, 
New  Jersey,  and  that  he  is  engaged  in  business  at  No.  33  Bcekman  street,  New  York,  and 
that  from  1854  until  October  8,  1872,  he  was  employed  by  Phelps,  Dodge  &  Co.,  and  that 
from  the  commencement  of  service  with  the  said  firm  he  was  assistant  casliier  until  eleven 
years  ago,  when  he  became  cashier,  which  position  he  held  until  he  left  the  said  firm  in  Octo- 
ber  last.  And  deponent  says  that  while  so  employed  he  kept  the  cash  book  and  cash  account 
of  the  said  firm,  and  one  Peter  N.  Moore  had  charge  of  the  Custom  House  business  of  the 
said  firm,  and. was  known  as  the  Custom  House  clerk,  and  one  Charles  F.  Herve  was  em- 
ployed as  assistant  Custom  House  clerk.  And  ho  further  says  that  at  various  times  the  said 
firm  received  allowances  from  the  Custom  House  for  damage  on  Russian  sheet  iron,  and  that 
the  said  Moore,  about  the  time  of  the  said  examinations,  drew  from  deponent  as  cashier  vari- 
ous sums  of  money,  amounting  at  different  times  to  one  hundred  or  one  hundred  and  fifty  dol- 
lars ;  and  that  the  said  sums  were  paid  by  him  as  such  cashier  by  order  of  some  member  of 
the  said  firm,  and  that  such  orders  for  him  to  pay  the  said  sums  from  his  desk  came  generally 
from  one  of  the  three  partners  named,  James  Stokes,  Anson  P.  Stokes  and  Thomas  Stokes 
respectively ;  and  he  saj's  that  the  sums  so  paid  were  charged  by  him  on  the  cash  book  of 
the  said  firm  as  '  Custom  House  expenses '  or  '  Custom  House  fees,'  and  were  carried  from 
the  said  cash  book  to  the  ledger  of  the  said  firm  to  the  account  of  'charges;'  and  he 
further  says  that  said  sums  of  money  were  paid  in  addition  to  all  legitimate  Custom  House 
expenses,  such  as  entries,  permits,  warehouse  bonds,  withdrawals  and  other  like  charges; 
and  he  further  says  that,  on  several  different  occasions  during  the  last  four  years,  the  said 
Charles  F.  Herve  has  stated  to  him  that  the  suras  so  drawn  by  Mr.  Moore  or  some  member 
of  the  firm  had  been  paid  by  Mr.  Moore  to  Custom  House  officers  in  his  presence,  and  he 
says  that  he  stated  to  the  said  Herve  that  he  (Porter)  did  not  wish  to  know  anything  about 
their  transactions ;  and  he  says  further  that  the  said  Herve  has  been  employed  in  the  same 
office  witli  him  for  years,  and  that  he  behoves  him  truthful  and  reliable  in  all  his  state- 
ments; and  he  further  says  the  statements  of  the  said  Herve  in  regard  to  the  payments  of 
money  to  the  customs  officers  were  mad©  to  him  at  the  time  of  the  payments,  as  near  as  ho 
can  now  recollect. 

"WM.  D.  PORTER. 

''  Subscribed  and  affirmed  this  6th  day  of  February,  1873,  before  mo. 
"B.  G.  JAYNE, 

"  Special  Agent  United  Stales  Treusury  Department.^' 


AN  EXTRAORDINARY  HISTORY.  75 

Mr.  Jayne  continued  :  Mr.  Porter  made  this  affirmation.  Mr.  Porter 
appeiu'ed  to  be  a  tliorouglily  reliable,  conscientious  man,  wlio  wished  to 
do  no  man  harm,  but  to  tell  the  exact  truth  without  variation  at  all  ;  and 
the  next  day  be  came  to  my  office  and  said,  "  Mr.  Jayne,  I  suppose  wlien 
you  asked  me  to  tell  the  truth  I  should  have  told  the  whole  truth,  should 
I  not  ?"  I  said,  "It  was  my  understanding  that  you  did  so."  He  said,  "I 
did  not  tell  all  ;  but  I  went  home  and  stated  to  my  wife  what  I  liad  done, 
and  we  liad  a  season  of  prayer  over  it;  and  I  have  concluded  to  come 
here  and  tell  you  the  balance  of  the  story."  He  said,  "These  men  have 
boon  my  friends,  but  the  truth  should  be  told,"  He  then  voluntarily  made 
this  additional  statement  : 


vs.  ^ 


"  United  States 
''vs. 
"Phelps,  Dodge  &  Co.  ) 

*'  Southern*  District  op  New  York,  ss: 

.  "  William  Dod^c  Porter  affinns  that  he  has  been  cashier  of  the  firm  of  Phelps,  Dodge  k 
Co.,  importers,  doiiig  business  at  Nos.  11  to  21  Cliff  street,  in  this  city,  from  18G2  until 
1872.  And  he  says  tliat,  in  his  statement  of  yesterday,  he  made  no  allusion  to  amounts 
paid  t<j  United  State  weighers  for  duplicate  returns,  but  the  amounts  pjiid,  as  then  stated, 
were  for  other  matters  not  relating  in  any  case  to  the  weight  of  goods.  And  he  further 
says  that  his  attention  was  callo<l,  by  one  Charles  F.  Herve,  at  the  time  (which  he 
thinks  was  about  one  year  ago)  to  duplicate  invoices  of  a  quantity  of  dress  goods 
consigned  to  D.  Willis  James,  a  partner  of  the  said  house,  wherein  the  value  and 
footings  wore  differently  stated,  the  diflferonco  being  more  than  one  third  the  value.  And 
he  says  that  he  was  informed  at  the  time  that  the  one  invoice  represented  the  cost 
price  for  the  purpose  of  payment  and  remittance,  and  the  other  was  for  use  in  the 
Custom  House.  And  ho  further  says  that,  at  the  time  of  making  the  payments  mentioned 
yesterday,  he  several  times  remonstrated  with  the  said  Moore,  telling  the  said  Moore 
that  he,  Porter,  did  not  believe  it  right  to  pay  these  sums  of  money  to  the  officers  of 
the  Government,  as  they  (the  officers)  were  paid  for  their  services  by  the  Government. 
And    he    says    that    the     said    Moore  would    make    answer  that    'We   have   to   do  it,' 

It's  customary,'  or  that  '  It's  all  right,'  or  words  to  tliat  effect.  And  ho  further  says 
that  he  believes  that  William  E.  Dodge,  Sr.,  knew  nothing  of  those  payments  in  any 
shape  or  form, 

"WM,  D.  PORTKR. 

"Subscribed  and  affirmed  tlils  7th  day  of  February,  1873,  before  me, 
"  B.  G.  JAYNE, 

'^  Special  Agent  United  States  Treasury  Departments^ 

Mr.  Dodge. — May  I  make  one  single  remark  to  the  Committee  ? 

The  Chairman  put  the  question,  and  permission  was  given  to  Mr. 
Dodge, 

Mr.  Dodge. — The  facts  are  simply  and  solely  those  :  There  was  a  friend 
who  bought  a  dress  in  Paris  for  Mrs.  James,  the  wife  of  one  of  my  partners. 


76  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

She  remonstrated  against  the  price  which  the  dressmaker  charged  for  it  in 
the  bill  that  was  sent  to  the  friend  who  bought  it,  and  she  insisted  on  it 
that  she  would  not  pay  the  price.  The  dressmaker  made  another  bill. 
Mr.  James  was  away  South  at  the  time  when  that  bill  came  home.  Both 
bills,  subsequently,  came  back  in  the  same  letter  together.  One  of  the 
bills  was  the  one  that  was  paid  and  receipted  ;  the  other  had  no  receipt 
at  all.  That  was  the  bill  that  was  rejected.  Out  of  respect  for  my 
partner,  who  is  a  little  above  undertaking  to  cheat  upon  a  single  dress,  I 
wish  to  state  that  fact. 

And  now  I  wish  simply  to  state  this  :  That  we  heard  nothing  of  this 
affidavit  of  Mr.  Porter  until  some  six  months  afterward.  He  is  a  nephew 
of  mine,  an  excellent  young  man,  to  whom  we  gave  capital  to  go  into 
business,  and  who  is  established  in  business  just  around  the  corner  from 
us.  He  always  had  our  confidence.  When  we  heard  of  this  affidavit  we 
sent  for  Mr.  Porter  and  asked  him  what  it  meant,  and  he  made  this  state- 
ment :  That  Mr.  Jayne  came  into  his  office  one  day  and  said  to  him,  very 
blandly,  "  Have  you  received  a  letter  from  your  cousin,  Mr.  William  E. 
Dodge,  stating  that  I  am  to  call  here  this  morning?"  He  said  he  had  not. 
"  Did  not  Mr.  Dodge,  in  person,  tell  you  that  I  was  coming  ?"  "  No." 
"  Well,  it  makes  no  difference;  I  want  to  make  some  inquiries."  He  went 
on  and  made  these  various  inquiries,  and  after  he  had  made  some  few 
inquiries,  Mr.  Porter  said,  "  I  do  not  know  who  you  are  or  why  you  should 
make  these  inquiries  of  me."  As  I  understand  the  matter,  Jayne  then  flew 
into  such  a  passion  as  you  saw  him  in  the  other  day.  He  opened  his  coat 
and  said,  "  I  will  let  you  know  who  I  am.  Here  is  my  badge  of  office. 
Now,  you  said,  in  conversation,  so  and  so;  I  will  put  it  right  down  upon 
paper."     He  sat  down  and  wrote,  and  Mr,  Porter  signed  it. 

All  I  have  to  say  in  regard  to  the  Russian  iron  matter  is  simply  and 
solely  this  :  This  Russian  iron  goes  into  the  public  stores  when  damaged 
by  salt  water,  and  it  is  a  matter  of  immense  importance  that  it  should  be 
examined  immediately  after  it  goes  to  the  warehouse.  When  it  is  being 
opened  and  unpacked  for  the  purpose  of  having  the  inspectors  go  to  see  it, 
the  men  would,  in  the  regular  course  of  business,  stay  from  the  hour  often 
in  the  morning  till  three  or  four  in  the  afternoon  ;  but  we  have  again  and 
again  engaged  these  storekeepers  to  keep  on  working  as  long  as  they 
could  see,  so  that  the  examiners  might  come  in  the  morning  and  make 
their  appraisement.  If  there  were  eight  or  ten  men  at  work  over  hours  we 
have  had  to  pay  them  ten  or  twenty  or  thirty  dollars  for  the  work  over 
hours.  We  have  done  so  again  and  again.  Beyond  that  we  never  paid 
a  dollar  to  any  appraiser  in  the  world,  never.  It  is  utterly  impossible,  in 
the  city  of  New  York,  where  business  has  to  be  done  ia  such  a  hurry,  to 


AN  EXTRAORDINARY  HISTORY.  77 

have  the  business  done,  unless  you  engage  men  to  work  over  hours.  That 
must  be  done,  or  else  goods  may  be  damaged  or  destroyed. 

Mr.  Wood  (to  Mr.  Jayne). — Leaving  that  subject,  please  to  tell  us  the 
modus  operandi  of  the  process  which  you  have  adopted  yourself  with  refer- 
ence to  the  seizure  of  books  and  papers. 

Mr.  Jayne. — I  wish,  first,  the  indulgence  of  the  Committee,  to  say  this  : 
That  on  going  to  Mr.  Porter's  office  I  found  that  he  had  not  arrived.  He 
lived  at  Orange  Valley.  I  was  at  his  office  in  the  morning,  a  little  before 
he  arrived.  I  sat  down  in  the  office  and  waited  until  he  came.  I  told 
him,  immediately  upon  his  arrival,  who  I  was  and  what  I  had  come  for, 
and  that  I  wished  to  ascertain  the  exact  truth.  No  unkind  word  ever 
passed  between  Mr.  Porter  and  myself,  and  I  never  stated  to  him  that  I 
had  the  letter  from  Phelps,  Dodge  &  Co.,  or  that  I  anticipated  that  there 
was  one  ;  and  that  picture  which  has  been  made  here,  to  my  personal 
knowledge,  is  not  so,  so  help  me  God. 

Mr.  Dodge. — We  have  the  affidavit  of  Mr.  Porter  to  that  effect. 

REBUTTING    AFFIDAVITS. 

In  further  answer  to  the  statements  of  Jayne  as  above  made  to  the 
Committee  by  Mr.  Dodge,  it  is  desirable,  and  at  the  same  time  essential 
to  the  completeness  of  this  narrative,  to  here  say — that  subsequently 
to  the  hearing  at  Washington,  the  charge  that  employes  of  Phelps, 
Dodge  &  Co.,  under  the  sanction  or  direction  of  its  firm,  had  paid  money 
at  different  times  to  influence  the  judgment  of  "  damage  examiners  "  of 
the  Custom  House,  was  reiterated  in  an  article  (evidently  prepared  by 
Jayne)  which  appeared  in  the  N.  Y.  Daily  Graphic  of  May  11th,  1874. 
The  result  was  to  call  forth  from  the  Custom  House  officers  and  other 
parties  accused  the  following  series  of  affidavits  (contradicting  the  state- 
ment of  Jayne  in  every  particular),  and  which  received  equal  publicity 
in  the  columns  of  the  Daily  Graphic  of  May  IGth,  1874. 

''  To  the  Editor  of  the  Graphic. 

"  Our  attention  has  been  called  to  certain  aflBdavits  published  in  the  DaUy  Gh-aphic  of  last 
Monday  reflecting  upon  us  and  upon  other  officers  in  our  department  Eacli  of  us  has  had 
a  business  experience  of  over  thirty  years,  and  we  have  occupied  our  present  positions  as 
Custom  House  damage  examiners  and  appraisers,  one  of  us  for  nine  and  the  other  for  five 
years.  So  far  as  we  know  this  is  the  tirst  time  that  the  character  of  either  of  us  has  ever 
been  assailed ;  and  we  must  ask  you  to  publish  in  refutation  our  affidavits,  together  with  the 
letters  of  Messrs.  Moore,  Porter  and  Frank  Heller,  who  at  our  request  have  kindly  made 
sworn  statements  in  support  of  our  own. 

"  Mr.  Gardner,  also  referred  to  in  the  affidavit  of  Charles  F.  Herve,  is  dead. 

"  Respectfully,  "  SAMUEL  BOYD. 

"  SAMUEL  J.  FARNUM." 


/  8  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

•'City  and  County  of  New  Youk,  State  of  New  York,  ss: 

'•  Samuel  Boyd,  being  duly  sworn,  says  that  he  resides  at  Montclair,  N.  J. ;  tluit  he  is  now, 
and  has  been  for  the  last  nine  years,  a  damage  examiner  and  appraiser  in  the  New  York 
Custom  House ;  that  there  is  not  now  connected  with  the  Custom  House,  and  there  has  not 
l)een  so  connected  for  the  last  nine  years,  any  other  damage  examiner  and  appraiser  by  the 
name  of  Boyd :  that  he  has  read  in  the  Daily  Graphic  of  May  1 1  an  aflBdavit  of  Charles  F. 
Herve,  and  that  the  statements  made  therein  that  said  Herve  has  seen  one  Moore,  Custom 
House  clerk  of  Phelps,  Dodge  &  Co.,  pay  various  sums  of  money  to  one  Boyd,  damage  ex- 
aminer of  the  Custom  House,  meaning  the  deponent,  and  that  said  Moore  presented  to  the 
deponent  a  bronze  clock,  are  entirely  untrue.  Tlie  deponent  says  that  some  years  ago  he 
purchased  an  imitation  bronze  clock  at  the  regular  wholesale  price  from  the  Ansonia  Brass 
and  Copper  Company,  aud  that  lie  paid  five  dollars  for  it ;  and  that  Mr.  S.  J.  Farnum  also 
purchased  one  at  the  same  price.  The  deponent  further  says  that  he  has  never  received, 
directly  or  indirectly,  any  money,  or  the  loan  of  any  mone}',  nor  any  gift  of  any  kind,  nor 
any  reward  or  remuneration  of  any  description  whatever  from  said  Moore,  or  from  Phelps, 
Dodge  &  Co.,  or  from  any  person  or  persons  in  the  employ  of  or  representing  them ;  and 
that  the  statements  and  suggestions  to  that  effect,  pubhshed  in  the  Daily  Graphic  of  May 
1 1 ,  are  utterly  false,  and  without  any  foundation  in  fact. 

"SAMUEL  BOYD. 

"Subscribed  and  sworn  to  before  me,  this  15th  daj'  of  May,  1874, 

"  PHILIP  JORDAN, 

"  Notary  Public,  K  Y.  Co:' 


"City  and  County  op  Neav  York,  State  of  New  York,  ss :  ' 

"  Samuel  J.  Farnum,  being  duly  sworn,  says  that  he  resides  in  the  City  of  New  York ; 
that  he  is  now  and  has  been  for  five  years  a  damage  examiner  and  appraiser  in  the  New 
York  Custom  House;  that  for  five  j'ears  there  has  been  no  other  damage  examiner  by  the 
name  of  Farnum  in  the  Custom  House ;  that  he  has  read  in  the  Daily  Graphic  of  the  11th 
of  May  an  affidavit  of  Charles  F.  Herve,  and  that  the  statements  therein  made,  tliat  said 
Herve  has  seen  one  Moore,  Custom  House  clerk  of  Phelps,  Dodge  &  Co.,  pay  various  sums 
of  money  to  one  Farnum,  damage  examiner  in  the  Custom  House,  meaning  the  deponent, 
and  that  the  said  Moore  presented  to  the  deponent  a  bronze  clock,  are  entirely  untrue.  The 
deponent  says  he  and  Mr.  Boyd  once  purchased  two  imitation  bronze  clocks,  at  the  regular 
wholCvSale  price,  from  the  Ansonia  Brass  and  Copper  Company,  and  that  they  paid  five  dol. 
lars  apiece  for  them.  The  deponent  furtlier  says  that  he  has  never  seceived,  directly  or  in- 
directly, any  money  or  the  loan  ot  any  money,  nor  any  gift  of  any  kind,  nor  any  reward  or 
remuneration  whatever,  from  said  Moore,  or  from  Phelps,  Dodge  &  Company,  or  from  any 
person  or  persons  in  their  employ  or  representing  them,  and  that  the  statements  and  sug- 
gestions to  that  effect  printed  in  the  Daily  Graphic  of  the  1 1  th  instant  are  entirely  false 
and  without  any  foundation  in  fact. 

"  SAMUEL  J.  FAENUM. 

"  Subscribed  and  sworn  to  before  me,  this  15th  day  of  May,  1874, 

"  PHILIP  JORDAN, 

''Notary  Public,'  N.    F.    Co." 


AN  EXTRAORDINARY  HISTORY.  79 

"New  York,  May  15,  1874. 
"  Messrs.  Samuel  Boyu  anj»  .S.  J.  Farnum. 

'•  Bear  Sirs — You  have  requested  me  to  reply  to  the  statements  published  in  the  Daily 
Graphic,  llth  instant.  Herve  states  that  I  paid  money  to  you  and  to  other  Custom  House 
damage  examiners,  and  presented  eacli  of  you  with  a  bronze  clock.  These  statements  are 
each  and  all  of  them  entirely  false. 

"The  suggestions  in  the  other  affidavits,  skillfully  made  to  appear  as  if  sustaining  them, 
are  without  real  foundation.  I  remember  that  you  did  each  purchase  and  pay  for,  at  whole- 
sale price,  a  cheap,  cast  iron,  bronze  colored  clock,  from  the  store  of  the  Anzonia  Brass  and 
Copper  Company,  which  is  in  Phelps,  Dodge  &  Co.'s  building,  but  during  the  twenty-eight 
years  that  I  have  been  at  the  head  of  their  Custom  Hoxi.'^e  Department  I  never  paid  to  you 
or  to  Mr.  Farnum,  or  to  any  C»istora  House  damage  examiner,  any  money,  directly  or  indi- 
rectly, nor  did  I  ever  give  cither  of  you  a  clock.  I  do  not  believe  that  any  such  payment 
or  gift  was  ever  made  by  or  for  the  tirm,  and,  from  the  position  held  by  me,  am  confident 
that  such  payment  or  gift  could  not  have  been  made  without  my  knowledge. 

"Very  truly,  "P.N.MOORE. 

"City  and  County  of  New  York,  as: 

"I,  Peter  N.  Moore,  being  duly  sworn,  do  depose  and  say  that  the  statements  contained 
in  the  foregoing  letter,  written  and  subscribed  by  me,  are  true. 

"  Sworn  to  before  me,  this  15th  day  of  May,  1874, 

"  THOS.  J.  SANSON, 

"  Notary  Public,  N.   Y.  Co:' 


"No.  :{3  IJEEKMAX  Street.  New  York,  May  15,  1874. 
"  Mr.  Samuel  Boyd. 

"■Dear  Sir — In  reply  to  your  request,  I  am  very  glad  of  the  opportunity  to  say  that  I 
never  knew  of  any  money  being  given  to  you,  or  to  any  other  United  States  damage  ex- 
aminer. I  do  not  believe  any  such  payment  was  ever  made  by  or  for  Phelps,  Dodge  &  Co., 
nor  have  I  ever  so  statetl.  The  stiitenient  and  suggestions  in  Hcrve's  affidavit  that,  on  the 
order  of  a  memlxjr  of  the  firm,  I  paid  a  large  sum  of  money  to  Mr.  Moore,  and  that  I  was 
informed  that  this  money  was  paid  to  Custom  House  examiners,  is  wholly  and  entirely 
false.  I  never  saw  or  heard  of  this  affidavit  of  Herve  until  after  it  appeared  in  the  Daily 
Graphic  of  the  llth  instant.  I  liave  often  paid  to  Mr.  Moore  small  sums  of  a  few  dollars 
at  a  time,  to  be  given  to  storekeepers,  watchmen  and  subordinates  in  the  Custom  House  for 
extra  hours'  work,  and  have  repeatedly  said  that  such  payments,  although  customary  among 
importers,  are  not  right,  and  ought  not  to  be  necessary;  but  I  am  greatly  surprised  to  find 
that  these  expressions  of  mine  have  been  so  artfully  combined  in  the  statement  of  my  ex- 
amination, as  prepared  by  Special  Agent  Jayne  for  me  to  sign,  that  they  are  made  to  appear 
to  supi>ort  the  moustrous  falsehoods  of  Herve. 

"  Respectfully  yours,  WILLIAM  D.  PORTER. 

"  City  and  County  of  New  York,  ss  : 

"  William  1).  Porter,  being  duly  affirmed,  says  the  statements  made  in  the  foregoing  letter 
are  true  of  his  own  knowledge. 

"  Affirmed  before  me,  this  15th  day  of  May,  1874, 

"ISRAEL  MINOR,  Jr., 
"  Notary  Public,  New  York  County." 


80  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

"  New  York  City,  May  13,  1874. 
"  Mr.  Samuel  Boyd. 

''  Dear  Sir — You  have  asked  rac  to  make  a  statement  about  my  affidavit  published  in  the 
Graphic  newspaper  of  last  Monday.  That  affidavit  was  written  out  by  Mr.  Jayne,  at  his 
office  in  tlie  Custom  House,  and  was  signed  by  me  without  my  reading  it.  I  am  a  German, 
and  it  is  hard  for  me  to  read  English  in  writing.  I  am  a  porter  in  the  employ  of  Messrs. 
Phelps,  Dodge  &  Co.,  and  have  charge  of  overhauling  Russia  sheet  iron.  As  to  any  pay- 
ments of  money  having  been  made  to  you,  or  to  any  other  examiners,  I  have  no  knowledge 
or  belief  that  any  such  payments  were  ever  made  by  Messrs.  Phelps,  Dodge  &  Co.,  nor  bj- 
any  one  for  them.  Mr.  Jayne  makes  me  to  say  in  my  affidavit  that  Herve  called  my  at- 
tention to  the  payment  of  money  by  Mr.  Moore  to  Custom  H6use  examiners.  If  Herve  told 
me  tliat  money  was  so  paid,  I  did  not  see  it  paid,  nor  do  I  believe  it  was  paid,  nor  have  I 
ever  so  stated.  Respectfully  yours,  "  FRANK  HELLER. 

"  Subscribed  and  sworn  to  before  me,  this  15th  day  of  May,  1874.  In  witness  whereof, 
I  have  hereunto  set  my  hand  and  affixed  my  official  seal. 

[Seal.]  "  WILLIAM  H.  CLARKSON, 

^^  Notary  Public  for  New  York  County,  N.  F." 


EXAMINATION  OF  JAYNE    BEFORE  THE  COMMITTEE  OF  WAYS 
AND  MEANS  CONTINUED,  MARCH  11th  1814. 

The  Chairman.— Who  furnished  you  with  the  duplicate  invoices  in  the  case 
of  Phelps,  Dodge  &  Co.? — A.  They  were  brought  to  me  by  the  attorney  of 
the  informer  ;  that  is,  those  I  had  in  advance  of  getting  their  books.  About 
two  thirds  of  all  of  them  were  found  attached  to  their  books  and  in  their 
possession. 

Q.  Those  that  were  brought  before  you  seized  their  books  were  brought 
by  the  attorney  of  the  informer  ? — A.  Yes,  sir. 

Mr.  Roberts. — Is  it  your  uniform  rule  to  return  all  books  and  all 
papers  that  have  been  seized  ? — A.  Unless  the  papers  are  the  true 
invoices  of  the  goods,  in  which  case  they  belong,  attached  to  the 
invoice,  in  the  Custom  House,  by  law.  They  have  sometimes,  however, 
been  returned. 

Q.  Did  you  return  the  papers  in  the  case  of  Phelps,  Dodge  &  Co.? 
— A.  I  did  not  return  all  of  them,  sir.  They  belong  with  the  papers  in 
the  Custom  House. 

Q.  Did  you  return  all  the  papers  which  the  informer  gave  to  you  in  that 
case — all  the  papers  that  came  from  the  house  of  Phelps,  Dodge  &  Co.  ? — 
A.  I  returned  every  paper  save  where  they  were  statements  of  the  cost  of 
goods  ;  every  scrap  of  paper. 

Q.  I  understood  you  to  say  there  was  a  burglary  in  that  case,  or  in  con- 
nection with  that  case  ? — A.  I  understood  there  had  been  a  burglary.  • 


AN  EXTRAORDINARY  HISTORY.  81 

Mr.  Kassox. — He  did  not  say  in  connection  with  this  case,  but  prior 
to  it. 

Mr.  Jayne — Not  in  connection  with  the  revenue  case  at  all. 

Mr.  Roberts. — But  there  were  papers  that  had  been  taken  ? — A.  Tliat 
was  a  matter  entirely  of  newspaper  notoriety.  I  spoke  of  the  attorney  of 
this  informer  having  been  the  attorney  for  a  man  who  had  committed  a 
burglary  prior  to  that  time. 

Q.  You  knew  that  some  of  the  papers  which  the  informer  brought  to 
you  had  been  stolen  from  Phelps,  Dodge  &  Co.  ? — .\.  I  knew  they  were 
bills  of  goods  purchased  by  those  gentlemen. 

Q.  You  knew  the  papers  had  been  stolen  frohi  the  house? — A.  Well, 
they  were  brought  to  my  office.  They  came  to  ray  office  in  the  hands  of 
an  attorney. 

Q.  And  with  the  statement  that  they  were  procured  from  the  house  of 
Phelps,  Dodge  &  Co.? — A.  That  they  were  copies  of  bills  of  goods  that 
they  had  purchased  in  Wales. 

Q.  In  a  word,  they  had  been  stolen  from  the  house  of  Phelps,  Dodge  & 
Co.  ? — A.  Well,  sir,  you  shall  name  it. 

The  Chairmax. — Was  that  in  connection  with  the  burglary  ? — A.  Not  at 
all.     It  had  nothing  to  do  with  it  whatever,  as  I  understood. 

Mr.  Roberts. — Have  you  any  of  those  papers  now? — A.  I  have  those 
papers  attached  to  those  entries,  that  showed  the  original  cost  of  the  goods 
— some  of  them. 

Q.  Do  you  regard  those  papers  as  the  property  of  Phelps,  Dodge  & 
Co.  ? — A.  I  regard  them  as  the  property  of  the  United  States,  and  as 
belonging  to  or  attached  to  the  entry,  and  it  was  the  duty  of  Phelps,  Dodge 
&  Co.,  when  they  received  them,  to  have  brought  them  to  the  Custom 
House  and  to  have  attached  them  to  the  entry,  as  they  swore  upon  each 
entry  they  would  do. 

Mr.  Dodgp:. — 1  would  like  to  ask  you  if  you  did  not  know  the  papers 
that  you  had,  and  which  were  not  invoices  in  any  shape  or  manner,  and 
which  you  tried  to  make  invoices,  were  stolen  property  ? — A.  I  say  I  knew 
they  were,  by  comparison  with  the  invoices  in  the  Custom  House,  bills  of 
the  same  identical  goods  ;  and  when  I  found  they  were  in  the  same  hand- 
writing with  the  papers  in  the  Custom  House  I  assumed  that  they  had  come 
from  the  parties  from  whom  they  had  purchased  these  goods.  I  did  not 
stop  to  try  side  issues,  any  more  than  a  court  questions  the  source  of  (evi- 
dence. Mr.  Eaton  gave  you  a  constitutional  argument  on  that  point.  An 
officer  has  no  right,  more  than  a  court  has,  to  try  side  issues. 

The  Chairman. — Did  you  not  promise  the  attorney  of  Phelps,  Dodge 
&  Co.  that,  if  the  money  were  paid,  all  the  papers  that  had  been  taken 

6 


82  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

from    tliem    should    be   returned  ?     That    question  is  put  to  you  by  Mr. 
Dodge,  through  me. — A.  There  was  no  stipulation  with  regard  to  them. 

Mr.  Beck. — The  lawyer  of  the  infoimer  brought  you  the  papers? — A. 
Yes,  sir. 

Q.  And  you  presumed  they  were  stolen,  and  I  suppose  he  knew  it  ? 
A.  It  is  not  my  duty  to  presume  in  any  way.  The  law  makes  it  my 
duty  to  ascertain  if  any  fraud  has  been  committed;  to  avail  myself  of  every 
source  of  information. 

Q.  Would  the  courts  of  New  York  allow  a  lawyer  to  practice  at  their 
bar  when  he  was  an  attorney  of  a  man  known  to  be  a  thief,  and  dealing 
with  stolen  papers? — A.  I  believe  the  courts  in  New  York  and  in  every 
other  State  in  this  Union  allow  attorneys  to  defend  thieves  and  protect 
them. 

Q.  But  do  they  allow  them  to  bring  suit  and  get  fees  out  of  the  proceeds 
of  plunder  when  they  themselves  have  been  the  agents  or  aiders  and  abet- 
tors of  the  thieves? — A.  I  do  not  get  the  exact  point  of  your  question. 
Please  state  it  again. 

Q.  I  will  put  it  in  this  way:  Did  the  Secretary  of  the  Treasury  know,  when 
he  paid  you  that  money,  that  you  were  to  give  two  thirds  of  it  to  the  thief 
and  his  lawyer  ? — A.  The  Secretary  of  the  Treasury  knew  that  1  presented 
evidence,  and  I  told  him  the  whole  story  of  its  source,  and  how  the  case 
came  to  me,  and  all  about  it. 

Q.  And  knew  that  this  thief  and  his  lawyer  were  to  get  two  thirds  of  it? 
A.  Well,  you  call  him  a  thief ;  yes,  sir. 

Q.  Yes,  sir  ;  I  do  call  him  a  thief.  And  the  Secretary  of  the  Treasury 
knew  that  he  was  to  get  two  thirds  of  it,  and  he  paid  the  money  ?^ — 
A.  The  Secretary  of  the  Treasury  knew  that  my  name  was  put  on  that 
information.     I  do  not  suppose  he  ever  made  an  inquiry  about  that. 

Q.  I  thought  you  said  you  told  him  all  the  facts  in  the  case. — A.  I  told 
ium  how  I  got  the  evidence  in  the  case. 

Q.  And  the  amount  to  go  to  those  men  ? — A.  I  do  not  know  that  I  told 
him  that.  I  do  not  know  that  he  asked  me  that  question.  I  should  if  he 
had  asked  me. 

Q.  Do  you  think  he  did? — A.  I  have  no  recollection  of  ever  having  a  con- 
versation with  him  in  regard  to  that  point.  If  he  had  asked  me  I  should 
have  told  him. 

Q.  Do  you  think  it  was  your  duty,  as  an  officer  of  the  United  States,  to 
communicate  that  fact  to  the  officer  who  was  to  pay  out  such  a  large  sum 
of  money — the  fact  that  two  thirds  of  the  portion  coming  to  you  was  to  go 
to  a  man  and  a  lawyer,  one  of  whom  was  a  thief  and  the  other  was  aiding 
and  assisting  a  thief? — A.  You  name  him  a  thief. 


AN  EXTRAORDINARY  HISTORY.  83 

Q.  I  will  ask  you  whether,  if  you  were  to  raise  your  hand  to  lieaven,you 
could  say  you  did  not  believe,  and  had  information  upon  which  you  acted, 
that  they  wer6  stolen  papers  ? — A.  I  do  not  know  that  I  am  called  upon  to 
say  whether  I  consider  it  a  theft  or  not. 

Q,  Do  you  refuse  to  answer  the  question  ?  It  is  a  simple  one.  Did 
you  not  know,  and  do  you  not  believe  now  that  those  papers  were  stolen  ; 
and  did  you  not  believe  it  at  the  time  of  making  an  agreement  to  give  them 
two  thirds  ? — A.  I  believe  those  papers  were  copies  of  bills  showing  the 
original  true  price  of  these  gOc)ds  that  should  have  been  placed  in  the  Cus- 
tom House  at  that  time. 

Mr.  Beck. — Mr.  Chairman,  I  object  to  that  answer. 

Mr.  Jayne. — It  was  no  part  of  my  duty  to  try  that  issue,  but  it  was  my 
duty  to  ascertain  if  the  law  had  been  violated. 

Q.  Now,  Mr.  Jayne,  you  can  answer  or  you  can  refuse  to  answer.  I 
will  put  a  question  that  you  cannot  misunderstand.  Do  you  not  believe 
that  at  the  time  that  you  got  those  papers  and  made  the  contract  to  pay 
that  man  and  his  lawyer  two  thirds  of  what  you  could  make  outof  the  case, 
that  they  had  come  by  those  papers  dishonestly  ?  Do  you  not  so  believe  ? 
You  can  say  yes  or  no,  or  you  can  refuse  to  answer,  whichever  you  please. 
— A.  I  do  not  think  that  is  a  proper  question  to  put  to  me  in  that  form. 

After  some  discussion  as  to  the  propriety  of  the  interrogatory,  the  ques- 
tion of  Mr.  Beck  was  reduced  to  writing  by  himself  and  propounded  to  the 
witness,  as  follows: 

Q.  Did  you  know  or  believe,  at  the  time  the  papers  of  Phelps,  Dodge  <fe 
Co.  were  brought  by  the  man  who  brought  them  and  his  attorney,  that  the 
papers  had  been  stolen  or  surreptitiously  taken  from  the  firm  ?  Did  you 
contract  to  pay  them  two  thirds  of  what  you  might  recover,  with  knowledge 
of  these  facts,  and  did  the  Secretary  of  the  Treasury  pay  you  with  knowl- 
edge or  information  that  two  thirds  of  it  went  to  those  parties  ? — A.  At  the 
time  the  papers  were  brought  to  me  by  the  attorney  of  the  informer  I  did 
not  ask  him  the  source  from  which  he  obtained  them,  and  he  did  not  tell 
me.  What  I  believed  is  perhaps  what  any  one  of  you  would  believe  under 
such  circumstances.  I  did  not  contract  to  pay  them  at  all.  Under  the  law 
the  man  bringing  the  information  to  my  office  was  entitled  to  one  fourth  of 
the  net  proceeds,  no  matter  who  works  up  the  case.  I  was  entitled  to 
nothing,  save  such  sum  as  they  should  voluntarily  pay  me,  but  they  re- 
quested that  1  should  put  the  case  in  my  name  and  should  pay  them  two 
thirds  of  the  amount  received,  which  I  did.  I  do  not  remember  that  I  ever 
told  the  Secretary  whether  the  whole  sum  was  to  be  paid  to  the  man  who 
had  brought  the  information  to  my  office  or  not.  The  case  was  discussed 
pretty  extensively  in  the  papers  for  several  weeks  before  this  sum  of  money 


84  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

was  paid  into  court.  The  name  of  the  informer — the  man  who  brought  this 
information  to  my  office — was  printed,  I  presume,  in  every  newspaper  in 
the  United  States,  and  was  a  matter  of  notoriety  all  over  the  world.  I  sup- 
pose the  Secretary  of  the  Treasury  read  the  papers,  and  knew.  I  do  not 
recollect  ever  having  any  particular  conversation  with  him  in  regard  to 
whether  I  was  to  retain  any  share  of  that  money  or  not. 

Mr.  Sheldon. — Who  was  the  money  given  to? — A.  It  was  awarded  to 
me. 

Q.  By  the  Secretary  ? — A.  Yes,  sir. 

Q.  How  could  he  award  it  to  you  if  he  knew  the  other  man  was  the  in- 
former?—A.  I  reported  the  case,  and  there  was  no  adverse  chiim.  It  be- 
longed to  me  if  there  was  no  adverse  claim  under  the  law. 

Mr.  Beck. — ^What  is  the  name  of  the  man,  and  what  is  the  name  of  his 
attorney? — A.  The  name  of  the  man  is  Charles  F.  Hervey.  Ho  had  three 
or  four  attorneys  and  counsel;  they  were  associated  together;  I  do  not 
know  in  what  way,  or  in  what  form,  or  anything  about  that. 

Q.  Which  one  came  to  you  with  the  papers? — A.  Well,  sir,  I  think  there 
were  two  of  them  that  came  with  him  in  the  first  place. 

Q.  And  brought  the  papers  with  them  ? — A.  Yes,  sir. 

Q.  Who  were  they? — A.  Dudley  Field  and  Ethan  Allen. 

Q.  How  much  money  did  they  get  ? — A.  I  gave  my  check  for  two  thirds 
of  the  money. 

Q.  Who  to? — A.  I  think  it  was  made  payable  to  the  order  of  Ethan 
Allen. 

Q.  A  lawyer  in  New  York  ? — A.  Yes,  sir. 

Q.  Dudley  Field  was  one  of  them,  too  ? — A.  Yes,  sir. 

Q.  He  came  with  this  man  ? — A.  Yes,  sir;  he  came  to  my  office.  He  is 
a  son  of  David  Dudley  Field.  I  think  there  were  .two  other  lawyers  em- 
ployed ;  one  was  named  Crosby,  formerly  of. Michigan. 

Q.  Did  all  those  men  take  part  of  the  money  ? — A.  1  couldn't  tell  you,  sir, 
in  what  way  they  divided  it. 

Q.  But  you  gave  the  money  to  Ethan  Allen? — A.  I  gave  the  check  to 
Ethan  Allen.     He  was  authorized  to  receive  it. 

Q.  Did  these  lawyers,  or  any  of  them,  in  any  of  their  conversation  with 
you,  tell  you,  or  did  this  man  Hervey  say  in  their  presence,  that  he  had  ob* 
tained  these  papers  surreptitiousl}^,  or  stolen  them  from  the  books  ? — A.  He 
never  told  me  how  he  came  by  them,  and  I  never  asked  him. 

Q.  Didn't  you  know  they  were  torn  out  of  their  books,  and  could  you  not 
see  where  they  were  torn  from? — A.  When  I  got  their  books  I  found  where 
the  papers  I  had  matched  on.  It  was  pretty  good  evidence  that  they  were 
torn  out.     There  were  lots  of  others  in  their  books. 


AN  EXTRAORDINARY  HISTORY.  85 

Q.  Did  these  lawyers  know  that,  at  the  time  they  came  to  you  and  made 
that  contract  ? — A.  I  cannot  tell  you  that.  I  w^as  not  admitted  to  the  pri- 
vate consultations  between  them. 

Q.  Did  they  never  tell  you  ? — A.  I  think  not,  sir. 

Q.  Nor  Hervey  ? — A.  I  think  not,  sir.  I  never  asked  him  any  question 
about  that. 

Q.  How  did  you  happen  to  look  and  see  where  the  papers  fitted  ?  What 
put  you  on  that  track  ? — A.  For  instance,  one  of  these  bills  being  in  the 
same  handwriting  as  the  invoice  in  the  Custom  House,  it  would  state  E  and 
a  diamond  1,4,  x;  cost  in  Wales  thirty-two  shillings;  and  in  the  Custom 
House  invoice  it  would  be  thirty  shillings.  On  the  paper  itself  would  hv 
the  date  of  the  shipment  and  the  ship  it  came  by.  I  would  get  up  the 
Custom  House  invoice  of  the  same  identical  ship,  take  the  mark,  and  trace 
the  goods,  and  find  it  in  the  Custom  House  invoice.  Then  1  would  turn  to 
their  invoice  book  to  see  where  it  was  copied  in  their  invoice  book,  and  I 
would  take  this  paper,  if  it  had  been  pasted  on — as  a  great  many  of  them 
were,  on  the  margin — and  lay  it  on  there,  and  see  where  it  had  been  torn 
off.     That  I  discovered. 

Q.  You  say  you  had  no  reason  to  believe,  from  conversation  with  these 
men  beforehand,  that  they  had  been  stolen  ? — A.  I  say  these  men  had  never 
told  me  that  the  papers  were  stolen,  and  I  never  asked  them  the  question. 
They  brought  the  papers  to  me. 

Q.  They  never  told  you  where  they  got  them? — A.  No,  sir;  they  need 
not.  The  papers  themselves  would  indicate  that  they  were  the  goods  uf 
Phelps,  Dodge  &  Co. 

Q.  And  you  now  tell  this  Committee  that  you  had  no  rea.son  to  believe, 
from  anything  that  occurred  with  these  men,  that  these  papers  were  sur- 
reptitiously taken? — A.  I  do  not  tell  them  any  such  thing. 

Q.  Have  you  not  reason  to  believe  it  ?  You  either  do  or  do  not. — A.  My 
dear  sir,  I  suppose  we  all  have  more  or  less  powers  of  reason,  and  I  sup- 
pose those  facts  would  point  to  certain  other  facts  which  are  inevitable  and 
conclusive. 

Q.  Mr.  Jayne,  there  is  a  very  direct  way  of  answering  a  question  if  a  man 
is  willing  to  tell  what  he  knows.  You  either  did  or  did  not  believe  it. — A. 
Well,  what  I  believed  is  not  evidence;  but  what  I  believed  I  acted  on. 

Q.  You  did  know,  before  you  drew  the  money,  and  before  you  divided  it 
with  these  lawyers,  that  they  had  been  surreptitiously  taken  from  those 
books? — A.  I  knew  they  had  come  from  those  books,  undoubtddly.  1  did 
not  know  how  they  had  been  taken. 

Q.  Did  you  not  know  that  they  had  been  surreptitiously  taken  from 
those  books,  as  well  as  you  know  that  you  are  sitting  in  that  chair,  before 


86  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

you  drew  the  money  from  the  Secretary  and  paid  it  over  to  tliose  men  ? 
Answer  that  question  yes  or  no,  or  refuse  to  answer  it. — A.  I  had  no  doubt 
those  papers  had  come  riglit  from  those  books. 

Q.  Did  you  not  know  that  they  were  surreptitiously  taken,  and  have  you 
not  told  this  Committee  they  were? — A.  I  think  not. 

Q.  Just  say  whether  you  will  answer  that  question  or  will  not. — A.  Yes, 
sir;  I  believe  that  they  came  from  there. 

Q.  Why  didn't  you  say  so.  then? — A.  Well,  I  have. 


CLOSING  STATEMENT  OF  MR.  WILLIAM  E.  DODGE. 

At  the  conclusion  of  Jayne's  examination,  Mr.  George  Bliss,  U.  S.  Dis- 
trict Attorney  for  the  Southern  District  of  New  York,  came  before  the 
Committee  (March  12th)  and  reviewed  at  length  the  working  of  the  Cus- 
tom House  laws,  and  detailed  his  own  experience  as  an  United  States 
official  in  their  administration  ;  his  remarks  being  mainly  in  opposition  to 
any  legislative  action  on  the  part  of  Congress,  looking  to  essential  modifi- 
cations or  repeal  of  the  (then)  existing  statutes,  and  in  direct  antagonism 
to  the  conclusions  and  petitions  of  the  various  Boards  of  Trade  and  Cham- 
bers of  Commerce  of  the  .country.  In  respect  to  the  case  of  Phelps, 
Dodge  «fe  Co.,  Mr.  Bliss  also  took  the  position  that  the  compromise  made 
by  this  firm  with  the  Treasury  Department  was  entirely  voluntary,  and, 
in  fact,  solicited  on  their  part;  that  there  was  nothing  of  "terrorism" 
used  as  an  agency  for  hastening  a  settlement  ;  and  that  the  whole  con- 
duct of  the  firm  was,  in  fact,  an  equivalent  to  the  admission  of  wrong  doing 
on  the  part  of  some  if  not  all  of  its  members. 

At  the  conclusion  of  Mr.  Bliss's  remarks,  therefore,  Mr.  William  E.  Dodge 
again  asked  permission  of  the  Committee  to  speak  in  vindication  of  him- 
self and  of  his  partners,  and  in  reference  to  the  points  specially  made 
against  them  by  the  District  Attorney,  and  permission  having  been  given, 
Mr.  Dodge  accordingly  addressed  the  Committee  as  follows  : 

Mr.  Chairman  and  Gentlemen  of  the  Committee — With  the  consent  of 
Mr.  Scliultz  I  will  say  a  few  words,  which  I  deem  necessary  for  my  own 
vindication  and  that  of  my  firm.  I  think  the  District  Attorney  may 
have  left  certain  impressions  upon  the  minds  of  the  Committee  to  which  I 
desire  to  reply. 

The  Chairman. — Proceed,  sir. 

Mr.  Dodge. — In  the  remarks  I  made  a  few  days  ago  I  said  it  was  not  so 
much  the  $271,000  that  we  cared  about  as  it  was  the  fact  that  those  indi- 


AN  EXTRAORDINARY  HISTORY.  87 

viduals  who  had  received  their  sliares  of  the  moiety  had  continued  down 
to  this  day,  eve7ywhere,  to  assume  that  Phelps,  Dodge  &  Co.  were  guilty 
of  fraud,  and  the  effort  of  the  District  Attorney  in  his  opening  remarks  has 
been  to  make  that  impression  deep  in  your  minds.  He  sought  first  to  show 
that  there  was  very  great  anxiety  on  the  part  of  Phelps,  Dodge  &  Co.  in 
the  matter  ;  that  they  complained  that  it  was  a  case  of  terrorism,  while 
there  was  none  ;  that  they  were  very  anxious  to  make  a  settlement ;  and 
this  fact  has  been  stated  again  and  again  as  positive  proof  of  their  guilt. 
In  addition  to  that  they  have  stated,  and  the  District  Attorney  stated  to- 
day that  we  had  admitted  positively  that  we  were  guilty. 

Mr.  Bliss. — Excuse  me,  Mr.  Dodge,  I  did  not  say  so. 

Mr.  Dodge. — I  beg  your  pardon,  sir  ;  no  other  inference  could  be  drawn 
fiom  what  you  did  say.  Now,  since  the  day  that  this  matter  was  first 
brought  to  our  notice,  and  we  examined  into  the  case,  we  have  never  re- 
fuseil  to  admit  openly,  everywhere,  before  friends  and  foes,  that  we  had 
committed  irregularities,  and  had  unintentially  made  ourselves  liable  to 
the  law  ;  but  we  never  have  anywhere,  under  any  circumstances  or  in 
any  position,  admitted  to  any  living  man  that  we  did  it  intentionally. 
Again,  this  $1,750,000,  as  I  said  before,  was  the  terror  held  over  us — the 
pistol  at  our  ears.  I  have  so  stated  before,  and  I  say  it  now,  sir.  And  I 
will  state  the  reason  that  we  were  so  anxious  to  have  it  settled — why  I 
came  to  see  Mr.  Boutwell  two  or  three  times.  As  I  stated  the  other  day, 
he  treated  us  kindly,  and,  perhaps,  if  we  had  taken  his  advice  we  should 
have  done  differently,  but  we  believed  that  if  we  left  the  matter  open  we 
did  not  know  who  would  settle  it,  as  Mr.  Boutwell  was  on  the  eve  of  his 
election  to  the  Senate,  and  we  were  anxious  to  have  it  settled,  because  we 
would  rather  pay  $271,000  than  have  the  Government  of  the  United  States 
hold  over  us  a  judgment  of  $1,750,000,  and  have  that  telegraphed  the 
world  over,  and  then  run  the  risk  of  getting  it  reduced.  It  was  a 
large  sum  to  have  hanging  over  us,  and  if  we  had  had  to  pay  that  amount 
what  would  this  special  agent  have  received  ?  He  would  have  received 
between  two  and  three  hundred  thousand  dollars  ;  my  friend  sitting  here 
(Mr.  Bliss)  would  have  received  over  $17,000,  and  the  Collector  over  $100,- 
000.  We  were  not  prepared  to  have  such  a  judgment  as  that  rendered 
against  us,  and  to  trust  to  any  living  man  for  a  settlement,  with  such  in- 
fluences surrounding  him.  That  was  the  reason  we  were  anxious  to  have 
it  settled,  even  by  the  paying  of  $271,000.  I  stated  that  it  was  a  case  of 
terrorism,  and  so  it  was,  when  there  were  not  less  than  seven  eminent 
lawyers  engaged  on  the  other  side,  and  constantly  contriving  to  see  how 
they  could  catch  us  in  the  matter.  I  felt  that,  under  these  circumstances, 
entrapped  as  we  were  by  the  law,  we  were  fortunate  in  settling  even  by 


88  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

the  payment  of  $211,000  for  an  alleged  fraud,  not  known  to  us,  of  $1,600. 
Never,  until  this  man  stood  here  to-day,  have  we  been  able  to  find  out 
anything  about  these  nine  invoices.  It  is  the  first  time  that  we  could  find 
that  out.  We  agreed  that  we  would  pay  the  amount  of  the  aggregated 
items  that  they  said  were  undervalued,  but  when  the  sum  came  to  us  it 
was  monstrous,  and  we  did  not  understand  it.  But  when  the  report 
comes  out  it  says,  **  Besides  two  whole  invoices  that  were  confiscated  be- 
cause the  charges  had  not  been  added."  Now,  I  have  the  law  and  the  de- 
cision of  the  courts,  that  we  sent  to  our  friends  in  Penang,  saying  that  in  case 
these  goods  were  sworn  to  at  the  port  where  they  started  from  and  went  to 
another  for  convenience,  the  date  of  the  voyage  commenced  at  the  time  when 
they  first  sailed,  and  purposely  we  had  put  on  the  invoice  (he  says  it  was 
put  across  the  invoices)  that  the  charges  were  not  added.  Did  that  look 
like  fraud?  No,  gentlemen,  there  is  an  effort  making  to  charge  us  with 
fraud,  but  I  stand  before  the  people  of  the  United  States  to-day  innocent, 
and  so  does  my  firm,  of  any  charges  whatever,  except  such  as  are  made 
by  these  men,  who  want  to  sustain  this  moiety  system,  and  make  out  that  our 
case  was  a  very  bad  one,  in  order  that  they  may  go  on  with  their  moieties, 

Mr.  Foster. — I  think  you  stated,  when  you  were  here  the  other  day,  Mr. 
Dodge,  that  there  were  lawyers,  members  of  Congress,"  who  w^ere  acting  as 
counsel  for  these  parties  ? 

Mr.  Dodge.— I  did  say  so. 

Mr.  Foster. — Well,  I  find  that  this  Committee  and  myself  have  been  sub- 
jected to  criticism  because  we  brought  out  the  name  of  only  one  such  mem- 
ber, while  there  were  others. 

Mr.  Dodge. — I  only  intended  to  speak  of  two.  I  have  no  hesitation  in 
stating  who  they  were,  after  all  that  has  been  said  before  this  Committee. 
I  have  purposely  avoided  naming  them  heretofore,  but,  if  the  Committee 
\vish,  I  have  no  objection. 

The  Chairman. — You  may  answer  the  question. 

Mr.  Dodge. — I  suppose  there  is  no  doubt  in  the  Committee's  mind  on 
the  subject  now,  as  it  was  admitted  last  night  by  the  special  agent  that 
he  did  employ,  in  one  case  specially.  General  Butler  as  counsel.  I  will 
add  that  Senator  Conkling  was  in  New  York,  and  in  consultation  with 
these  gentlemen  at  the  time  when  for  two  days  the  question  hung  whether 
this  thing  should  be  settled  or  not,  and  hung  simply  on  the  fact  that  Mr. 
Laflin  said  the  crime  was  so  enormjus  that,  so  far  as  he  was  concerned,  he 
never  would  consent  to  settle  it  short  of  the  payment  of  $500,000  by 
Phelps,  Dodge  &  Co.  I  think  Senator  Conkling  advised  him  to  do  better. 
I  only  wish  he  had  stuck  to  it  one  day  longer. 

Mr.  Foster. — Is  that  all  you  know  about  it  ? 

Mr.  Dodge. — That  is  all  I  know  about  it. 


AN  EXTRAORDINARY  HISTORY.  89 


REMARKS    OF  HON.  JACKSON  S.  SCHULTZ. 

From  the  remarks  of  Hon.  Jackson  S.  Schultz,  Chairman  of  the  Com- 
mittee of  the  New  York  Chamber  of  Commerce,  who  followed,  before  the 
Committee,  Messrs.  Bliss  and  Jayne,  and  reviewed  at  considerable  length 
the  statements  of  these  two  Federal  officials,  are  made  the  following  ex- 
tracts, having  a  more  or  less  direct  bearing  on  the  case  of  Phelps,  Dodge 
&  Co.  : 

Mr.  Chairman — I  believe  that  you,  gentlemen  of  this  Committee,  will 
agree  with  me  that  the  special  agent  of  the  Treasury  Department  has 
brought  against  the  Custom  House  in  the  City  of  New  York  a  stronger  in- 
dictment than  ever  was  framed  and  presented  before.  And  I  believe  you 
will  agree  that  if  we  can  rely  upon  his  statements  as  to  the  condition  of 
things  there,  it  was  high  time  that  an  unsophisticated  youth  from  the  west- 
ern part  of  the  State  of  New  York,  "  with  hay  seed  in  his  hair  and  grass- 
hoppers upon  his  garments,"  should  come  down  to  morally  revolutionize 
our  Cit}^  and  our  Custom  House.  In  the  year  1869  there  came  down  to 
New  York  this  youth,  having,  doubtless,  all  the  qualities  that  he  described 
to  you  as  the  qualities  so  necessary  in  an  officer  of  this  kind — so  necessary 
in  an  officer  who  should  draw  from  the  public  treasury  or  from  the  citizens 
of  New  Y'oik  $100,000  a  year  for  his  services.  He  came  down  there  and 
labored  with  us.  He  made  reports  to  the  different  officials  of  the  Govern- 
ment, especially  to  his  superiors.  After  laboring  for  four  years,  what  was 
the  result  ?  He  told  us  he  made  those  reports,  and  they  were  not  heeded. 
He  charged  that  men  in  office  received  bribes,  and  that  they  did  all  sorts  of 
irregular  things,  and  yet  he  could  not  get  them  displaced.  And,  therefore, 
he  says,  "while  thieves  are  permitted  to  remain  in  office,  I  look  upon  the 
seizure  of  books  and  papers  as  little  less  than  highway  robbery."  Thus, 
disgusted  with  all  his  efforts,  he  throws  up  the  sponge  and  resigns.  What 
Ave  are  to  do  now  without  his  moral  influence  is  beyond  my  comprehension; 
indeed,  I  scarcely  know  what  we  did  before,  or  how  we  were  able  to  collect 
any  revenue  at  all.  We  went  on  very  comfortably,  however,  before  that 
time,  and  very  little  trouble  occurred,  but  we  must  have  had  robbers  with- 
out number. 

Now,  I  wish  to  call  the  attention  of  the  Committee  especially  to  his  state- 
ments, and  1  shall  try  to  keep  within  the  statements  made  by  him.  He 
said  that  within  his  experience  he  had  had  sixty-one  cases,  and  that  fifty- 
two  of  them  were  made  by  officers  who  had  bribed  somebody — fifty-two 
out  of  sixty-one — and  in  all  instances  he  has  presented  all  the  facts  showing 
this  state  of  things  to  his  superior  officer,  who  may  have  been,  in  this  case, 


90  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

the  Secretary  of  the  Treasur}^,  certainly  not  the  Collector,  inasmuch  as  he 
said  that,  for  the  soke  of  convenience,  he  did  recognize  the  Collector  to  be 
his  equal,  although  in  law  and  in  theory  he  was  the  superior  of  the  Col- 
lector, and  that  his  only  superior  was  the  Secretary  of  the  Treasury.  There- 
fore, if  we  are  to  believe  him,  if  we  believe  him  at  all,  his  reports  are  on 
record  in  the  office  of  the  Secretary  of  the  Treasury,  in  Washington,  to  the 
efifect  that  these  fifty-two  men  have  been  accepting  bribes  from  merchants, 
and  yet  he  did  not  tell  us  that  one  of  them  had  been  removed,  although 
the  inference  may  be  drawn  that  some  of  them  had  been  displaced. 

Mr.  Kelley. — He  said  that  some  of  the  earlier  cases  that  he  referred  to 
had  removed. 

Mr.  ScHULTz. — But  he  did  not  specify,  and  left  the  impression  that  they 
were  all  guilty.  Now,  I  submit  that  on  that  showing  the  Custom  House  is 
in  a  bad  condition.  But  more  than  this,  this  special  agent  absolutely 
charges  that  he  accepted  information  from  these  gentlemen,  and  allowed 
them  to  turn  State's  evidence,  and  gave  them  a  part  of  the  moieties — re- 
warded them  by  giving  them  a  share  of  the  moieties.  Was  there  ever  so 
pitiable  a  condition  of  affairs  as  that?  And  yet  these  gentlemen  are  re- 
tained in  public  office.  Now,  gentlemen,  I  do  not  think  I  state  the  case  too 
strongly.  I  would  appear  before  you  this  afternoon"  as  a  defender  of  the 
present  administration  and  of  the  Custom  House  against  such  charges,  if 
their  representative  were  not  here  to  do  it  better  himself.  I  do  not  believe 
that  state  of  things  which  has  been  represented  here  exists,  but  if  it 
does,  you  cannot  too  soon  send  a  special  committee  to  New  York  to  find 
out  what  is  going  on  there,  and  you  cannot  too  soon  change  the  system 
which  entraps  so  many  merchants,  and  does  this  great  wrong  not  only  to  the 
merchants  but  to  the  \ery  informers.  Consider  it,  as  it  has  been  put  by  one 
member  of  this  Committee,  that  the  information  obtained  is  good  enough  to 
"  strike"  a  merchant  with;  that  it  is  good  enough  to  take  hundreds  of  thou- 
sands of  dollars  out  of  the  pockets  of  merchants;  that  it  is  good  enough  to 
bring  on  them  disquiet  and  anxiety,  and  make  them  suffer  all  sorts  of  pangs, 
but  it  is  not  good  enough  to  bring  to  punishment  a  man  at  least  equally 
guilty  with  the  merchant.  I  submit  that  the  district  attorney  did  not  an- 
swer your  question  when  you  asked  him  whether  he  had  any  prosecutions 
against  these  men.  AVhoever  heard  of  a  man  in  the  Custom  House  being 
prosecuted  for  collusion  or  for  taking  bribes,  except,  perhaps,  by  being 
quietly  dismissed  from  the  public  service?  Such  things  may  happen  occa- 
sionally, but  I  submit  that  I  read  the  New  York  papers,  and  I  have  never 
yet  seen  an  account  of  one  of  these  men  having  been  convicted  or  even 
prosecuted  for  any  crime.  Now,  this  special  agent  must  be  mistaken,  and  if 
he  is  mistaken  in  such  an  important  matter  as  this,  is  he  worth  a  $100,000 


AN  EXTRAORDINARY  HISTORY.  91 

a  year  ?  Is  that  a  fair  price  to  pay  for  a  man  who  has  been  gathering  this 
information  for  four  years,  and  who,  after  all,  makes  so  many  and  so  dread- 
ful mistakes  ?  But  if  he  is  right  you  must  reform  that  Custom  House.  It 
is  a  weight  that  I  undertake  to  say  you  cannot  carry.     You  must  unload. 

PAYMENTS  BY  MP:RCHANTS  TO  CUSTOM  HOUSE  OFFICERS. 

I  believe  it  is  true  that  a  great  many  weighmasters,  and  a  great  many 
employes  in  the  public  service  do  accept  from  merchants,  from  time  to  time, 
and  from  one  consideration  or  another,  certain  pay,  and  I  have  been  amazx'd 
at  the  greenness,  for  I  can  call  it  nothing  else,  of  some  gentlemen  here  in 
Washington,  who  seem  to  make  strange  of  it  that  merchants  pay  for  services 
rendered.  Now,  I  undertake  to  say  to  you  in  this  regard  that  there  is  not 
an  importing  merchant  in  the  City  of  New  York  who  could  escape  the 
charges  made  here,  provided  he  were  examined  with  the  same  strictness 
that  has  been  applied  to  some  of  these  firms.  1  say  there  is  not  a  single 
importing  house  in  the  City  of  New  York  that  has  not  at  some  time  or  an- 
other paid  to  some  of  these  men  some  money  for  services  rendered.  Let  us 
see  how,  and  under  what  circumstances.  I  had  occasion  yesterday,  in  this 
room,  to  question  one  of  the  men  of  the  highest  moral  character  of  this  city 
upon  this  subject — I  mean  General  Butler.  No  one  will  question  his  au- 
thority. "  Sir,"  said  I,  "  if  I  should  come  before  your  Committee,  and  should 
have  some  business  in  which  1  required  the  services  of  one  of  your  em- 
])loyes  to  do  some  extra  work — copying,  or  something  of  that  kind — would 
you  allow  me  to  pay  him  for  it?"  "  Oh,  yes;  no  difficulty  about  that." 
"Then  would  you  allow  me,  if  I  had  a  cargo  on  the  dock  and  I  wanted  to 
get  it  in,  and  the  storekeeper  would  not  keep  his  office  open  after  sun  down, 
that  being  the  regulation,  and  I  wanted  him  to  keep  it  open  two  or  three 
hours  longer — would  you  allow  me  in  such  a  case  to  pay  him  for  that  ser- 
vice?" The  gentleman  began  to  see  the  logic  of  the  thing,  and  he  backed 
square  out.  It  would  not  do  for  a  merchant  to  do  that  in  New  York,  but 
he  might  do  it  in  Washington.  That  appeared  to  be  his  view  as  near  as  I 
could  get  at  it.  Now,  if  I  were  to  occupy  your  attention  until  to-morrow 
morning  I  could  not  describe  to  you  the  varied  circumstances  under  which 
we  are  called  upon  to  pay  money  for  such  services — to  pay  it  with  perfect 
honesty  on  our  own  behalf  and  on  behalf  of  the  recipients.  You  have  got 
a  system  of  business  which  necessitates  it.  The  employes  of  the  Govern- 
ment are  not  always  the  most  energetic  business  men  in  the  world.  I  sup- 
pose I  do  not  offend  any  one  by  saying  that  now.  We  will  regard  this 
table  as  a  city;  this  city  is  divided  into  districts,  and  there  are  as  many 
weighers  as  there  arc  districts.      Suppose,  now,  it  is  my  misfortune  to  have 


92  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

my  cargo  in  a  district  where  the  man  is  incompetent,  or  is  sluggish,  or  is 
not  well.  1  want  my  cargo  weighed  promptly;  how  do  I  get  it  done? 
Why,  I  have  got  to  "  stimulate  "  him.  You  have  been  trying  to  justify 
moieties  here  because  they  "  stimulate  "  these  gentlemen  to  do  their  duty. 
Now,  I  must  apply  a  stimulant  to  this  man  [laughter],  but  it  is  not  neces- 
sary for  me  to  bribe  him.  I  am  paying  $125  demurrage  every  day.  Every 
day  that  the  vessel  lies  there  it  costs  me  $125  for  demurrage;  and  by 
spending  $50  or  $75  extra  I  can  get  that  cargo  w^eighed  two  or  three  days 
earlier  than  I  could  otherwise.  Now,  this  state  of  things,  I  am  told,  is 
charged  against  the  merchants  as  a  crime.  But  I  could  state  to  you 
varying  circumstances  that  would  occupy  your  attentioH  for  hours,  show- 
ing how  perfectly  proper  it  is  for  a  merchant,  in  order  to  facilitate  his 
business,  to  pay  men  extra.  Let  us  take  a  case.  That  "  Pepper "  case 
was  a  good  illustration  of  it.  Here  is  a  weighmaster  employed  by  the 
Government ;  there  is  a  weighmaster  belonging  to  the  public — a  city 
weighmaster.  It  may  be  that  they  are  brothers,  or  father  and  son,  or  that 
they  have  friendly  relations  with  each  other.  They  have  a  cargo  to  weigh. 
Now,  shall  each  of  these  gentlemen  put  his  scales  on  the  dock,  in  the  way 
of  the  other,  and  stand  there  wath  his  gang  of  men,  and  after  one  of  them 
has  got  done  weighing  the  cargo,  then  the  other  weigh  it  over  again  ?  That, 
certainly,  would  not  be  business  like,  but  it  would  be  according  to  law.  But 
the  way  they  do  it  is  this:  Perhaps  the  Custom  House  weigher  has  a  good  deal 
to  do,  and  the  merchant  makes  an  arrangement  to  give  him  an  extra  return. 
But,  in  the  first  place,  let  me  explain  that  the  Custom  House  w^eighmaster,  in 
weighing  a  cargo,  iron,  for  instance,  is  not  very  particular.  He  throws  it  on 
to  the  scale,  and  if  it  is  a  few  pounds  either  way  it  does  not  make  much 
difference;  he  weighs  it  merely  for  the  purpose  of  collecting  the  duties. 
Now,  suppose  you  stipulate  with  this  man,  saying  to  him,  **  I  want  to  get 
this  return  from  you,  and  I  want  you  to  weigh  this  accurately."  And  sup- 
pose you  pay  him  something  extra  for  doing  that,  is  that  any  harm  ?  Is 
not  the  Government  likely  to  get  better  justice  done  when  the  cargo  is 
weighed  accurately  in  that  way  than  if  it  is  weighed  loosely,  merely  for  the 
purpose  of  levying  the  duty  ?  iinch  cases  as  this  are  within  the  experience 
of  every  merchant  in  New  York.  But  this  thing  is  not  without  its  diffi- 
culties, ^ome  two  or  three  years  ago  a  Committee  of  Congress  came  to 
New  York  and  overhauled  the  Custom  House  and  found  this  state  of  things, 
that  there  was  not  a  single  department  in  the  Custom  House  that  was  not 
in  the  habit  of  taking  pay  for  over  work.  If  merchants,  even  the  largest 
and  best  merchants  in  New  York,  wanted  to  get  their  invoices  examined 
promptly,  they  had  to  pay  some  young  man  to  take  them  home  at  night,  or 
to  work  on  them  somewhere  over  night,  in  order  to  get  them  through. 


AN  EXTRAORDINARY  HISTORY.  93 

That,  however,  was  regarded  as  wrong,  and  it  was  discontinued.  There 
was  an  order  issued  that  it  should  not  go  on,  and  the  employes  of  the  Cus- 
tom House  felt  very  much  aggrieved.  I  know  that  I  had  two  or  three 
young  friends  in  the  Custom  House  who  were  in  the  habit  of  making  five 
or  six  hundred  or  even  a  thousand  dollars  a  year  beyond  their  salaries  by 
over  work,  and  they  complained  of  the  change,  and  two  of  them  quit  the 
Custom  House  for  the  very  reason  that  they  could  not  live  on  their  salaries 
without  this  addition  to  them — and  they  were  the  best  men  that  were  in  the 
Custom  House,  too. 

Now,  as  to  this  case  of  Phelps,  Dodge  &  Co.  What  are  the  facts  ?  They 
have  an  immensely  bulky  business.  They  are  carting  all  the  time  from  their 
vessels.  Somebody  has  got  to  keep  the  storehouse  open  for  them,  and  they 
have  got  to  pay  for  that  service.  Suppose  it  is  a  cargo  of  tin,  and  it  is 
damaged  by  salt  water — you  know  how  readily  salt  water  damages  tin — 
now,  this  has  got  to  be  exposed  and  cleaned  off  at  once.  It  cannot  wait 
from  Saturday  to  Monday;  it  has  to  be  done  at  once.  I  happen  to  have 
lived  in  their  neighborhood  for  about  twenty-five  years,  and  I  know  that 
their  trucks  are  going  sometimes  all  night.  Now,  suppose  that  firm  should 
say,  "  We  are  very  conscientious.  We  will  not  pay  for  extra  work;  and  if 
our  men  won't  do  extra  work  without  extra  compensation,  then  we  will  quit 
the  business."  But  they  don't  do  anything  of  the  sort.  When  they  have 
business  to  do  they  do  it,  whether  it  is  done  by  the  Government  men  or 
their  own  men,  and  whenever  it  becomes  necessary  to  employ  extra  labor 
they  employ  it,  and  pay  for  it,  and  when  they  do  so  they  enter  it  upon  their 
books.  A  merchant  that  is  honest  cannot  afford  to  have  a  private  account, 
and  puts  it  right  on  the  cash  book.  No  man  can  spend  a  cent  in  a  well 
regulated  house  that  it  does  not  appear  on  the  books,  and  in  all  these  cases 
if  you  were  to  examine,  I  will  guarantee  that  you  would  find  these  expenses 
regularly  entered  on  the  cash  account.  This  special  agent  held  up  to  you 
copies  from  the  ledger  of  Phelps,  Dodge  &  Co.,  charging  to  this  ship  and 
the  other  ship  $5,  $10,  $15,  $20,  as  if  that  were  something  dreadful.  There 
is  nothing  remarkable  about  that.  I  should  expect  to  find  it  charged  just 
exactly  in  that  way  in  an  honest  house.  I  submit  that  that  is  no  evidence 
— yes,  it  is  evidence — evidence  that  there  was  no  fraud  intended — in  the 
fact  that  the  charges  were  put  there  on  the  books,  subject  to  the  inspection 
of  every  clerk  in  iheir  employ.  Do  you  think  that  Phelps,  Dodge  &  Co., 
with  sixty,  seventy,  or  eighty  clerks — do  you  suppose  that  any  merchant 
can  afford  to  put  any  dishonest  transaction  on  his  books,  where  it  is  subject 
to  be  known  by  men  who  are  liable  to  expose  him,  not  to  the  Government, 
perhaps,  but  to  his  customers?  If  any  wrong  were  intended  would  it  thus 
be  laid  before  the  eyes  of  men  who  might  use  it  to  the  merchant's  disad- 


94  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

vantage  whenever  he  did  anything  that  the  clerk  thought  wrong — not  take 
him  into  partnership,  not  increase  his  salary,  or  do  any  one  of  a  hundred 
things  that  clerks  complain  of?  I  think  I  need  not  do  more  than  state  this 
proposition.  Now,  I  submit  that  there  is  no  evidence  before  you  produced 
by  Mr.  Jayne  that  any  of  these  parties  have  done  anything  more  than  my 
own  house  and  every  house  in  the  City  of  New  York  does.  Of  course  the 
amounts  paid  by  Phelps,  Dodge  &  Co.  would  be  larger  than  the  amounts 
paid  by  others,  because  their  business  is  very  large  and  bulky,  and  it  takes 
a  great  many  men  to  do  it,  and  I  should  be  surprised  if  they  did  not  have 
hundreds  and  even  thousands  of  dollars  to  pay  each  year  for  extra  services 
in  this  way. 

Now,  I  want  you  to  remember  this.  We  have  been  called  off  here  again 
and  again,  and  have  had  a  great  many  hypothetical  cases,  and  a  great 
many  conundrums  put  to  us  that  I  cannot  solve,  but  I  wish  to  call  the 
attention  of  the  Committee  to  the  fact  that  when  Mr.  Jayne  presented  him- 
self here  to  defend  this  moiety  system  he  told  you  that  he  was  going  to 
present  the  pivotal  case.  I  was  not  present,  but  I  saw  his  language 
reported,  and  by  "  the  pivotal  case  "  I  take  it  for  granted  he  meant  the 
case  around  which  all  the  others  turn — that  it  was  a  fair  "  specimen  brick." 
Now,  gentlemen,  you  have  examined  this  case  with  care,  and  I  am  glad 
you  have.  There  are  no  gentlemen  on  this  continent  better  acquainted 
with  the  Phelps,  Dodge  &  Co.  case  than  you  are  to  day  ;  and  if  that  is  a 
pivotal  case  what  do  you  think  of  the  rest  of  them  ?  Many  of  you  are  law- 
yers. I  ask  you  whether,  if  you  had  been  the  advisers  of  that  firm,  with 
your  knowledge  of  the  law  and  your  present  knowledge  of  the  case,  you 
would  have  advised  them  to  settle?  You  say  no  ;  but  the  lawyers  that 
they  selected  did  advise  them  to  settle,  and  they  are  supposed  to  know 
the  law.  I  have  no  authority  for  saying,  and,  in  fact,  that  firm  has  always 
denied  it  to  me,  but  I  submit  the  proposition  that  when  we  get  to  the 
bottom  of  this  whole  matter — it  may  be  years  yet,  but  I  hope  it  will  be 
during  the  lifetime  of  some  of  us — it  will  turn  out  that  a  legal  conspiracy 
— if  that  is  not  a  misnomer — that  a  legal  conspiracy  has  existed  in  the 
City  of  New  York,  more  or  less  criminal,  and  that,  as  you  look  at  the  facts 
of  this  case  and  scrutinize  them,  you  will  see  that  I  do  not  misjudge.  Here 
were  gentlemen  in  the  law — three  or  four  of  them — who  understood  the 
law  perfectly,  competent  to  understand  it  as  it  has  been  presented  to  you,  and 
you  will  wonder  that  they  could  have  advised  that  settlement;  yet  they 
did.  As  the  gentleman  tells  you,  they  ran  around  the  streets  at  night,  late 
and  early,  pleading  for  settlement  ;  and  consider  the  theatrical  arrange- 
ment of  the  gentleman  coming  to  the  attorney's  office  and  saying,  "  Sir,  I 
won't  come  in  if  you  go  to  offer  me  back  my  check  ;  don't  you  offer  me 


AN  EXTRAORDINARY  HISTORY.  95 

that  check  and  then  I  will  come  in!"  That  is  "too  thin."  It  don't 
answer  the  case.  I  do  not  charge  that  Colonel  Bliss  was  in  this  conspiracy, 
but  I  do  say  that,  with  my  knowledge  of  this  case  and  of  the  counsel  con- 
cerned, I  cannot  comprehend  how  they  could  have  so  persistently  advised 
a  settlement.  I  happen  to  know  of  some  other  cases  where  such  men  as 
William  M.  Evarts  have  been  employed  as  counsel,  and  they  have  never 
advised  a  settlement.  They  have  advised  fight — resistance — and  they  have 
some  of  those  cases  now;  and,  in  my  judgment,  they  have  advised  wisely. 
In  one  case  which  I, have  heard  of  the  parties  insisted  on  settling  because 
they  settled  for  a  mere  nominal  sum  ;  but  even  in  that  case  Mr.  Choate 
told  me  it  was  contrary  to  his  advice,  against  his  protest,  and  the  other 
parties  must  take  the  entire  responsibility.  You  recollect  what  was  said 
to  us  the  other  day  by  this  gentleman  (Mr.  Jayne).  He  described  to  you 
the  situation  in  the  Custom  House.  He  told  you  what  influences  were  at 
work,  and  how  strenuously  he  had  served  his  country  fifteen  hours  a  day, 
and  had  broken  down  physically,  mentally,  and  perhaps  morally  ;  but, 
said  he,  "  Now  we  are  on  the  home  stretch."  Thank  God  for  that  I  I  don't 
know  but  he  has  helped  us  to  get  around  on  that  home  stretch.  I  begin 
to  feel  myself  that  we  are  on  the  home  stretch.  I  begin  to  think  I  see  day- 
light, and  I  think  it  likely  (I  want  to  be  generous)  that  he  has  helped  us 
to  get  around  to  this  fortunate  position;  because,  without  a  strict  technical 
enforcement  of  the  law,  we  would  probably  have  been  groping  around  yet, 
as  we  have  been  for  several  years  past.  And  who  would  have  been  struck? 
Only  a  few  German  houses,  without  friends  ;  a  few  who  could  not  excite 
public  attention.  But  when  they  struck  other  men  who  had  friends,  that 
brought  relief,  and  enlisted  your  sympathy,  as  it  will  that  of  the  whole 
country.  General  Butler  told  me  here  that  the  people  were  not  with  us. 
Well,  I  am  not  a  very  good  judge  of  what  *'  the  people  "  are  doing,  but  I 
know  that  justice  is  on  our  side,  and  the  people  finally  get  on  the  side  of 
justice,  and  I  believe  that  General  Butler  is  wrong.  But  Mr.  Bliss  said  to 
you  to  day,  very  ironically,  "Why  don't  these  big  merchants  of  New  York 
come  here  and  tell  of  their  sufi'erings  ?"  Now,  I  had  heard  that  there  were 
three  or  four  merchants  in  New  York  who  were  standing  out  from  this 
movement,  saying,  "  We  have  not  been  struck  ;  we  are  holier  than  you  !" 
I  went  and  saw  one  of  them  on  the  subject,  and  he  said  to  me,  "  No,  sir; 
I  never  have  sympathized  wiih  this  action.  I  think  it  degrading,  both  to 
the  Government  and  to  the  man."  "May  I  say  so?"  I  asked  hira,  and  he 
answered  "Yes."  I  wrote  to  another  gentlemen  who  was  supposed  to  be 
willing  that  these  things  should  go  on.  I  wrote  to  him  and  called  his 
attention  to  "  carloonsP  In  less  than  two  hours  he  was  in  my  office. 
"Who  told  you  about  my  cartoons  ?"  he  asked.     "  Nobody,"  I  said.     "I 


96  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

know  that  anybody  who  is  engaged  in  that  business  must  be  affected  in 
that  way."  He  absented  himself  for  four  hours,  and  then  he  returned  and 
said,  in  substance,  '1  am  in  up  to  here  "(his  neck);  and  he  has  been  trying 
to  make  his  peace  with  the  Custom  House  ever  since.  I  wish  him  success, 
and  I  think  he  is  more  likely  to  be  successful  than  he  would  have  been  a 
few  months  ago.  I  come  now  to  a  case  which  I  will  mention  by  name.  I 
understood  that  Mr.  H.  B.  Claflin,  who  is  my  personal  friend,  had  said,  in 
an  examination  before  a  Congressional  Committee,  that  he  thought  there 
was  no  danger  for  an  honest  man,  and  I  understood  that  lie  had  said  that 
tiiis  committee  of  merchants  that  was  going  on  to  Washington  need  not 
undertake  to  represent  him;  and  inasmuch  as  I  was  going  to  Washington 
as  a  member  of  the  committee,  and  as  1  did  not  want  to  misrepresent  any- 
body, I  wrote  him  a  polite  note,  saying,  in  substance,  "  If  you  desire  to  be 
counted  out  I  will  say  so  to  the  committee  ;"  but  at  the  same  time  I  called 
his  attention  to  certain  circumstances  and  facts,  which  he  handed  over  to 
his  importing  clerk,  who  soon  told  him,  "  Mr.  Schultz  and  those  gentlemen 
are  right  about  this,  and  you  are  not  exempt  at  all."  "  Do  you  mean  to 
say,"  says  Mr,  Claflin,  "  that  a  single  item  vitiates  the  whole  of  an  invoice  ?" 
"Certainly."  "  Oh,  that  cannot  be."  "Well,  if  it  is  true,  what  then?" 
"  Well,  you  go  down  and  tell  Schultz  to  represent  me,  too."  [Laughter.] 
Now,  1  say  this  :  that  whenever  I  am  challenged  to  apply  these  tests  I 
will  apply  them,  be  the  consequences  what  they  may.  When  one  man 
sets  himself  up  to  be  better  and  holier  than  his  neighbor,  he  must  have 
some  reasons  for  the  faith  that  is  in  him.  We  say  that  the  law  is  bad  ;  we 
say  that  no  man,  however  honest  liis  purpose,  can  escape  ;  and  so  believ- 
ing, we  say  that  when  a  man  undertakes  to  stand  up  and  brave  what  he 
calls  public  opinion,  and  says  that  he  is  not  affected,  we  will  ask  him  to 
account  for  his  good  fortune.  A  word  about  public  opinion  :  1  don't  know 
that  I  am  a  good  judge  of  public  opinion,  but  if  I  do  not  mistake,  you 
will  have  no  doubt  on  that  subject  in  less  than  thirty  days.  If  public  sen- 
timent is  what  you  want,  we  will  go  home  and  ask  our  constituents  (and 
they  constitute  the  entire  merchants  of  New  York)  ;  we  will  ask  them 
what  they  think  of  this  law.  According  to  the  district  attorney,  the  public 
press  does  not  amount  to  much  as  an  exponent  of  public  opinion,  for  some 
influence  is  at  work  writing  all  these  expressions  of  opinion  which  appear 
in  the  papers,  but  we  will  take  some  means  of  discovering  what  public 
opinion  really  is  on  this  point.  You  prescribe  the  test  for  us — we  do  not 
care  what  it  is — and  if  we  do  not  show  you  that  public  sentiment,  indepen- 
dent and  irrespective  of  all  party  lines  and  considerations,  is  in  our  favor  on 
this  question,  then  we  will  yield  the  whole  thing. 

Mr.  Wm.  E.  Dodge  again  appeared  before  the  Committee,  and  was  exam- 
ined as  follows  : 


AN  EXTRAORDIXARY  HISTORY.  97 

Mr.  Wood. — You  mentioned,  Mr.  Dodge,  in  reply  to  Mr.  Foster,  the  name 
of  another  member  of  Congress,  besides  General  Butler,  who  was  in  New 
York  at  the  time  of  your  settlement — Senator  Conkling.  Will  you  please 
state  whether,  in  your  opinion  he  was  there  as  counsel,  or  in  any  capacity 
from  which  he  derived  any  pecuniary  compensation  or  benefit,  or  in  what 
way  you  suppose  he  was  there. 

Mr  Dodge. — I  never  had  the  most  distant  idea  that  he  was  there  profes- 
sionally, but  I  believe  he  happened  to  be  in  New  York  at  the  time  that 
this  thing  was  in  process  of  settlement,  and  was  in  council  with  some 
of  the  other  gentlemen  there,  particularly  I  believe  with  reference  to 
the  position  then  occupied  by  Mr.  Laflin.  I  have  never  mentioned  his 
name  before  in  the  matter.  My  own  impressions  were  that  he  had  no 
pecuniary  interest  in  it  in  any  way.  I  have  always  looked  upon  it  as 
a  mere  accidental  visit  on  his  part  to  the  city.  Still  the  fact  that  he  was 
there  in  connection  with  the  other  gentlemen  showed  what  an  array  there 


STATEMENT  OF  HON.  NOAH  DAVIS,  IN  REFERENCE  TO  HIS 
CONNECTION  AS  U.  S.  DISTRICT  ATTORNEY  WITH  THE 
CASE  OF  PHELPS,  DODGE  &  CO. 

The  connection  of  Hon.  Noah  Davis  with  the  case  of  Phelps,  Dodge  & 
Co.,  and  his  proceedings  in  relation  to  the  same  as  U.  S.  District  Attor- 
ney (an  office  which  he  then  filled),  having  been  reviewed  by  his  suc- 
cessor (Mr.  Bliss)  in  bis  speech  before  the  Committee,  March  12th,  in  a 
somewhat  critical  and  disparaging  manner,  Judge  Davis  on  the  I9th  of 
March,  subsequent,  appeared  before  the  Committee,  and.  submitted  the 
following  statement : 

"What  I  say  now,  Mr.  Chairman,  will  relate  particularly  to  my  connec- 
tion with  the  Phelps,  Dodge  &  Co.  case,  and  I  shall  make  it  as  brief  as  pos- 
sible. That  case  arose  eight  or  ten  days  before  the  expiration  of  my  term 
of  office  as  United  States  Attorney  for  the  Southern  District  of  New  York. 
I  had  sent  forward  my  resignation,  to  take  eflfect  on  the  1st  of  January, 
1873,  having  been  elected  one  of  the  Judges  of  the  State  Supreme  Court, 
and  my  judicial  term  of  office  commencing  on  the  1st  of  January,  1873.  I 
was  very  much  engaged  in  the  effort  to  close  up  my  business,  both  official 
and  professional,  so  far  as  I  could,  before  leaving  that  office  and  before 
entering  on  the  other,  which,  by  the  constitution  of  the  State,  would  pre- 
clude me  from  doing  any  business  as  a   counsellor  or  attorney  in  any  of 

7 


98  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

the  courts  of  the  State.  My  first  knowledge  of  the  Phelps,  Dodge  &  Co. 
case  was  this  :  I  received,  about  eleven  o'clock  in  the  morning,  a  note 
from  Mr.  Laflin,  the  naval  officer  at  New  York,  which  was  brought  to  me 
by  a  messenger,  who  came  with  a  carriage,  asking  me  to  drop  any  business 
1  had  on  hand  and  come  immediately  to  the  Custom  House  with  that  mes- 
senger in  the  carriage,  the  note  saying  that  my  advice  was  desired  in  a 
case,  th«  most  important  that  had  ever  arisen  in  the  district.  That  is 
substaotially  the  language  of  the  letter.  I  did  as  requested  ;  I  went  to 
the  Custom  House  in  the  carriage  which  had  been  sent.  I  found  in  Mr. 
Jayne's  room  Mr.  Laflin,  Mr.  Cornell,  the  surveyor,  and  Mr.  Jayne.  Mr. 
Laflin  said  to  me  that  they  had  sent  for  me  to  advise  in  a  case  which  had 
been  under  investigation  by  Mr.  Jayne,  against  Phelps,  Dodge  &  Co.;  that 
they  wanted,  before  taking  any  further  steps,  my  advice  whether  or  not 
the  investigatioa  by  Mr.  Jayne  disclosed  facts  which  would  justify  further 
proceedings.  I  went  into  an  examination,  Mr.  Jayne  producing  a  lot  of 
Custom  House  invoices,  in  respect  to  which  the  alleged  frauds  were 
claimed  to  have  been  committed,  and  certain  papers,  which  he  called 
duplicate  invoices^  whieli  had  been  furnished  to  him,  as  he  said,  by  some 
clerk  who  had  previously  been  in  the  employment  of  Phelps,  Dodge  &  Co. 
He  also  presented  me  with  an  aftidavit  made  by  that  person — an  afiidavit 
which  I  have  never  since  seen,  and  of  the  contents  of  which  I  have  only  a 
general  recollection.  T.he  substance  of  it  was,  according  to  my  recollec- 
tion, that  that  firm  had  been  in  the  habit,  for  a  long  period  of  time,  of  re- 
ceiving duplicate  invoices, 'O^e  of  which  varied  from  the  other  ;  that  he  had 
had  charge  of  them,  and  he  said,  if  I  recollect  aright,  that  he  had  been  in- 
structed to  take  those  invoices  and  destroy  them,  and  that,  instead  of 
doing  so,  he  had  kept  them,  and  that  they  were,  or  some  portion  of  them 
were,  furnished  by  him  to  t/he 'Government  officer.  I  looked  through  the 
papers  that  were  there  witli  u 'good 'deal  of  care.  Mr.  Jayne  showed  them 
to  me,  and  pointed  out  the  alleged  discrepancies  in  several  entries,  in  res- 
pect to  which  he  claimed  tliat  frauds  had  been  discovered.  After  spend- 
ing much  time  in  looking  at  itlicm  and  seeing  their  general  character,  I 
told  the  officers  that  were  present  that  it  was  quite  apparent  that  the  law 
had  been  violated  by  that  firm  in  making  the  entries  of  those  goods  at  the 
valuation  put  upon  them  by  Uiemselves,  instead  of  making  their  invoices 
so  as  to  show  the  actual  cost — the  .purchase  price — which  the  law  re- 
quired, and  that,  in  my  judgment,  it  was  a  case  which  would  justify  them 
in  pursuing  the  investigation. 

"  It  was  then  suggested  by  Mi*.  Jayne  that  a  warrant  should  be  imme- 
diately obtained,  and  the  papers  and  books  of  the  house  seized.  I  told 
him  that,  so  far  as  that  was  concerned,  I  was  willing  that  only  this  course 


AN  EXTRAORDINARY  HISTORY.  99 

should  be  pursued  :  that  they  might  prepare  the  papers  for  the  applica- 
tion for  a  warrant  and  bring  them  the  next  morning  to  my  office,  to  myself 
personally,  and  that  I  would  take  them  and  go  to  the  Judge  personally 
and  make  the  application  for  a  warrant,  and  that  if  a  warrant  was  granted 
I  would  keep  the  control  of  it,  coming  to  the  Custom  House  in  the  morning 
with  it  and  with  a  deputy  marshal  ;  and  that  the  collector  or  some  other 
of  those  gentlemen  should  send  to  Messrs.  Phelps,  Dodge  &  Co.,  and  re- 
quest the  members  of  that  firm,  or  some  of  them,  to  come  to  the  Custom 
House,  so  that  I  could  have  an  interview  with  them.  It  had  got  quite 
late  at  this  time  ;  it  was  after  five  o'clock  in  the  afternoon,  and  the  business 
offices  were  all  closed.  Mr.  Jayne  was  extremely  anxious  that  the  warrant 
should  be  in  condition  for  immediate  service,  because  he  said  that  he  was 
so  far  satisfied  in  his  own  mind  that  fraud  had  been  committed  that  if  the 
house  got  information  that  a  warrant  was  out,  the  books  and  papers 
might  be  destroyed  or  put  out  of  the  way,  and  1  told  him  that,  to  guard 
against  that,  the  warrant  could  be  there  presetit  at  the  time  of  the  inter- 
view, and  if  the  firm  was  not  willing  to  permit  a  full  inspection  of  their 
books  and  papers,  the  warrant  could  be  ready  for  service  as  expeditiously 
as  those  gentlemen,  or  any  of  them,  could  go  back  to  their  business  house 
for  the  purpose  which  he  feared. 

"Mr.  Jayne  came  up  the  next  morning  with  the  papers  prepared  and 
sworn  to.  They  were  incorrect — not  complying  as  I  thought  with  the 
statute — and  I  made  alterations  on  them  and  required  them  to  be  resworn 
to,  and  I  then  went  before  the  Judge,  not  letting  any  of  the  assistants  in 
my  office  know  that  such  an  application  was  pending.  My  custom  had 
been  when  those  papers  came  to  me,  after  looking  over  them  myself,  to 
ask  one  of  my  assistants  to  take  them  before  the  Judge  and  apply  for  u 
warrant  upon  them.  This  was  the  only  case,  to  my  recollection,  in  which 
I  had  ever  applied  for  a  warrant  personally.  I  went  with  the  papers  to 
the  Judge,  who  examined  them  and  granted  the  warrant,  and  delivered  it 
to  me.  I  then  requested  a  deputy  marshal  to  go  down  with  me  to  the 
Custom  House.  We  went  there  and  Messrs.  Phelps  and  Dodge  were  sent 
for.  The  elder  Mr.  Dodge,  the  senior  of  the  firm,  and  Mr.  James,  a  mem- 
ber of  the  firm  whom  I  had  never  met  before,  came  there  together.  We 
saw  them  in  the  ante-room  of  Mr.  Jayne's  office.  Mr.  Jayne  and  myself, 
Mr.  Dodge  and  Mr.  James  being  present.  I  stated  to  Mr.  Dodge  what  pro- 
ceedings were  pending  ;  that  an  investigation  had  been  had  into  their  in- 
voices ;  and  that  I  had  been  called  down  there  the  day  before,  and  had 
said  to  the  officers  that,  in  my  opinion,  it  was  a  case  which  justified  further 
investigation  ;  that  1  had  requested  of  them,  before  any  further  steps  were 
taken  against  the  firm,  that  the  members  of  the  firm  sliould  be  sent  for,  and 


100  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

that  I  should  have  an  opportunity  to  have  an  interview  witli  them.  I  tokl 
them  the  nature  of  the  charges.  These  gentlemen  were  very  much  sur- 
prised. The  elder  gentleman,  Mr.  Dodge,  did  most  of  the  talking.  He  ex- 
pressed great  astonishment  that  anything  of  that  kind  should  be  alleged 
against  his  house,  and  protested  his  entire  innocence  and  want  of  knowl- 
edge that  anything  of  the  kind  had  ever  occurred,  and  declared  his  readi- 
ness to  pay  any  duties  which  the  Government  had  lost  by  reason  of  any 
errors,  mistakes,  or  oversights  of  his  firm,  and  also  to  pay  any  penalties 
that  might  have  been  incurred.  Mr.  James  also  made  a  like  protest  as  to 
his  entire  innocence  and  ignorance  of  what  was  alleged.  They  wanted  to 
know  the  particular  grounds  of  the  charges.  Jayne  got  the  statute  and 
pointed  out  the  law,  and  told  them  the  consequences  of  its  violation.  He 
took  the  oath  made  at  the  Custom  House  by  owners,  and  showed  them 
wherein  the  oath  which  a  person  in  their  house  had  been  accustomed  to 
make  had  varied  from  the  oath  required  by  the  regulations  as  the  owners' 
oath.  I  told  Mr.  Dodge,  in  the  course  of  the  conversation,  that  a  further 
examination  of  his  books  and  papers  would  be  required,  and  that  a  warrant 
had  been  issued,  which  I  should  withhold  in  case  they  were  willing  that 
the  examination  should  be  made  without  any  service  of  the  warrant.  Mr. 
Dodge  at  once  expressed  in  the  fullest  terms  his  entire  willingness  to  have 
his  books  and  papers  examined,  saj^ing  that  everything  in  that  establish- 
ment was  at  the  service  of  the  Government.  I  then  said  to  him  that  there 
would  be  no  occasion  for  the  service  of  the  warrant ;  that  I  should  take  the 
warrant  back  to  my  ofi&ce  and  withhold  it  5  that  Mr.  Jayne  would  accom- 
pany him  to  his  store,  and  that  they  could  deliver  to  him,  Mr.  Jayne,  such 
books  and  papers  as  he  wanted.  They  expressed  themselves  satisfied  with 
that  arrangement.  Jayne  and  one  or  two  officers  went  with  him  to  the 
■store  and  I  returned  to  my  office. 

In  relation  to  what  occurred  there  I  feel  bound  to  say  that,  while  I  was 
present,  there  were  no  threats  except  what  might  be  implied  by  the  exhibi- 
tion of  the  statute  and  the  pointing  out  of  the  penalties  which  Jayne 
insisted,  with  a  vehemence  natural  to  him,  they  had  subjected  themselves 
to,  saying  that  they  had  forfeited  a  very  large  amount,  stating  it,  in  round 
numbers,  at  over  a  million  of  dollars ;  and  stating,  also,  that,  in  taking  the 
oath  they  had  subjected  themselves  to  the  penalties  of  perjury.  Beyond 
that  there  were  no  threats  or  terrorism  (if  that  word  has  any  particular 
signification)  used,  to  my  knowledge  ;  but  in  a  late  conversation  with  Mr. 
Dodge  (it  is  but  justice  to  him  that  I  should  say  something  more  in  regard 
to  what  he  said  on  that  subject)  he  has  stated  to  me  that  he  had  an  inter- 
view the  next  day  with  Mr.  Jayne,  when  I  was  not  present,  and  that  he 
had  probably  mingled  in  his  statement  here,  what  was  said  at  the  two 


AN  EXTRAOllDINARY  HISTORY.  101 

intorvicws  ;  but,  on  that  occasion  I  have  stated  substantially  nil  that 
occurred  while  I  was  present. 

I  went  back  to  my  office.  I  was,  of  course,  very  much  engrossed  in 
business.  I  heard  nothing  more  of  these  proceedings,  except  that  a  young 
man  who  is  in  Mr.  Jayne's  employment  came  into  my  office  once  or  twice, 
according  to  my  recollection,  and  said  that  Mr.  Jayne  was  making  discov- 
eries beyond  what  he  had.  expected.  I  heard  nothing  during  the  interval 
up  to  the  30th  of  December  except  that,  and  I  saw  none  of  those  parties  to 
converse  with  in  reference  to  the  case. 

On  the  30th  December,  in  the  afternoon,  a  message  came  for  me,  inviting 
me  to  go  to  the  Astor  House,  to  Mr.  Jayne's  rooms.  Mr.  Jayne  was  living 
at  the  Astor  House  with  his  family,  occupying  rooms  there.  I  went  to  the 
Astor  House  and  found  Mr.  Jayne,  Mr.  Wakeman,  and  Mr.  Knox,  of  the 
firm  of  Fullerton  &  Knox.  These  gentlemen  were  together  in  the  room. 
Mr.  Jayne  stated  to  me  that  I  had  been  sent  for  with  a  view  to  see  in  what 
manner  the  case  could  be  closed  up  without  delay.  He  stated  to  me  that  a 
proposition  had  been  made  to  compromise  the  case  at  a  sum  which  he 
named,  which  was  considerably  less  than  two  hundred  thousand  dollar?. 
I  think,  if  my  recollection  serves  me,  that  it  was  about  $150,000,  but  the 
precise  figures  I  have  not  in  my  mind.  He  said  that  that  proposition  had 
been  made,  and  that  he  had  resolved  not  to  accept  it,  as  it  was  not  enough. 
I  then  asked  him  to  show  me  the  papers,  as  he  had  made  up  the  case  from 
his  examination.  He  showed  me  the  papers,  saying  that  he  had  discov- 
ered, and,  as  he  said,  substantially  proved,  that  those  entries  had  been 
made  in  respect  to  invoices  amounting  to  over  a  million  dollars.  He  had 
not  then  the  amount  of  the  items  that  were  especially  affected  by  the  frauds, 
but  the  aggregate  amount  of  the  invoices  in  which  those  items  were  con- 
tained. He  showed  to  me,  or  repeated  to  me,  substantially,  his  statement 
of  what  was  contained  in  letters  and  in  papers  which  he  called  duplicate 
invoices,  though  I  did  not  see  them,  and  was  under  the  impression  at  the 
time  that  they  were,  in  fact,  actual  duplicates  of  the  invoices  entered. 
Those  which  I  had  seen  the  day  I  was  at  the  Custom  House  were,  in  their 
general  character,  not  exactly  duplicate  invoices,  but  they  were,  in  a  great 
degree,  letterpress  copies  containing  items,  and  accompanied  by  notes 
showing  that  the  goods  were  purchased  under  such  and  such  contract,  or 
something  to  that  effect. 

I  looked  into  these  papers  sufficiently  to  see  that  my  impression  tliat 
there  had  been  a  violation  of  the  statute  was  well  founded,  and  I  said  to 
these  gentlemen,  the  counsel  who  were  there,  and  Mr.  Jayne,  in  substance, 
that  the  only  way  in  which  this  case  can  be  settled  at  once,  without  refer- 
ring it  to  Washington  in  order  to  have  tho  approval  of  the  Secretary  of  the 


102  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Treasury,  will  be  for  the  collector  to  adopt,  what  has  been  heretofore  adopt- 
ed, as  I  understand,  at  the  Custom  House,  one  of  two  modes.  One  is  to 
select  certain  invoices  equal  to  the  amount  that  may  be  agreed  upon  as  the 
compromise,  and  direct  a  suit  for  the  entire  amount  of  those  invoices.  The 
other  course,  which  has  been  adopted,  as  I  understand,  in  one  or  two 
instances,  is  to  select  from  all  the  invoices  the  items  specially  affected  by 
the  alleged  fraud,  and  make  the  value  of  those  items  the  basis  of  the  com- 
promise. Mr.  Jayne  said  that  course  had  been  pursued  by  the  collectors 
in  several  instances.  Mr.  Jayne  was  then  requested  to  go  through  with 
the  invoices  and  select  those  items  and  see  what  they  would  amount  to. 
This  suggestion  was  made  not  by  me,  but  by  the  counsel  who  were  pres. 
ent  representing  the  firm  of  Phelps,  Dodge  &  Co.  Mr.  Jayne  sat  down  by 
the  table  and  I  sat  down,  looking  casually  through  the  papers  in  the  room. 
Mr.  Jayne  went  through  the  various  items  and  reported  that  the  approxi- 
mate aggregate  amount  was  $260,000.  While  Jayne  was  making  the  com- 
putation the  other  gentlemen  had  retired  to  a  room  in  which  I  understood 
Mr.  James  and  Mr.  Dodge  were,  although  I  did  not  see  them  at  all  on  that 
occasion.  Jayne  made  out  an  aggregate  sum  of  two  hundred  and  sixty 
thousand  dollars  and  stated  it  to  me.  I  said  to  him,  **  Mr.  Jayne,  they 
never  will  pay  any  such  sum."  "  Well,"  said  he,  **  you  will  see  that  they 
will."  The  gentlemen  were  sent  for  and  requested  to  come  in.  They  came 
into  the  room,  took  the  papers  from  Mr.  Jayne,  looked  over  them,  and  very 
soon  went  out  of  the  room  again,  going,  as  I  supposed,  to  see  their  princi- 
pals. They  returned  in  a  few  minutes,  saying,  "  We  will  consent  to  pay 
this  $260,000."  I  was  then  requested  to  go  to  my  office  (it  had  got  to  be 
quite  late  in  the  afternoon)  and  to  remain  there  at  least  an  hour,  they  say- 
ing that  they  would  go  to  the  collector  and  obtain  a  letter  directing  me  to 
commence  a  suit  for  $260,000.  They  wanted  me  to  remain  at  the  office,  so 
that  if  they  came  there  with  such  a  letter  I  could  issue  a  capias,  and  Mr. 
Wakeman  could  indorse  his  appearance  at  once  and  deliver  a  check  for  the 
amount — in  substance  giving  a  cognovit  for  judgment,  so  that  the  matter 
should  be  closed  up  the  first  thing  next  morning.  I  went  to  my  office  and 
waited  there  for  an  hour.  I  should  add,  however,  that  it  was  said  to  me 
that  if,  by  any  accident,  they  could  not  find  the  collector  at  his  office,  I 
should  therefore  take  a  capias  to  my  house,  and  that  in  the  course  of  the 
evening,  if  I  were  not  in  the  office  when  they  got  there,  they  would  come 
to  my  house  with  the  check  and  indorse  the  appearance  on  the  capias  in 
the  same  manner.  I  waited  at  the  office  about  an  hour.  It  grew  quite 
dark,  and,  as  they  did  not  come,  I  looked  up  a  capias  and  went  to  my  house. 
I  heard  nothing  from  them  that  night.  The  next  morning  I  went  down  to 
my  office.     I  had  an  appointment  with  Mr.  Bliss,  to  be  there  at  10  or  lOJ 


AN  EXTRAORDINARY  HISTORY.  103 

o'clock,  for  the  purpose  of  putting  him  in  possession  of  the  facts  in  a  num- 
ber of  cases  then  pending  in  the  calendar  ready  for  trial,  and  into  which  he 
would  come  on  the  opening  of  the  court  the  following  week.  He  came 
there  at  about  the  appointed  time.  After  we  went  through  those  cases, 
spending  two  hours  at  least  in  going  through  the  various  cases,  and  in  my 
advising  as  to  the  facts  and  points  of  law  on  which  the  cases  depended, 
(they  were  all  Government  cases),  and  while  I  was  sitting  there  with  him 
explaining  these  matters,  a  note  from  Mr.  Jayne  was  brought  to  me  by  a 
messenger.  I  looked  at  the  note  and  told  the  messenger  that  I  would  come 
down  presentl}^  and  then  I  went  through  the  business  with  Mr.  Bliss. 
When  I  got  through  the  business  with  Mr.  Bliss  I  said  to  him,  *'  I  am  now 
going  to  the  Custom  House,  I  suppose,  to  close  up  the  heaviest  case  that  has 
ever  arisen  in  this  district.  The  terms  of  the  settlement  were  arranged  last 
evening,  and  I  supposed  that  under  the  arrangement  the  matter  would 
have  been  closed  up  last  night,  but  it  has  not  been  done."  Now,  I  said  to 
him,  "Mr.  Bliss,  I  do  not  wish  you  to  be  under  the  impression  that  I  have 
neglected  business  which  I  ought  to  have  attended  to  in  this  office,  just  as 
1  am  going  out  for  the  purpose  of  hurrying  through  a  matter  that  would 
give  me  a  heavy  fee,  and  I  suggest  this  to  you :  that  you  go  down  with 
me  to  the  Custom  House  ;  and  that  we  both  participate  in  closing  up  the 
matter  and  that  you  take  half  the  fee."  He  seemed  to  be  very  much  sur- 
prised when  I  made  this  proposition  to  him.  He  started  out  of  his  chair, 
walked  to  the  mantelpiece,  stood  there  a  moment,  and  turned  to  me  and 
said:  "Judge,  since  you  have  made  that  proposition  I  feel  bound  to  say  to 
you  that  that  case  is  not  going  to  be  closed  to-day.  I  learned  last  night 
all  that  had  been  done  at  the  Astor  House.  I  was  with  the  collector  at 
his  home  till  a  late  hour.  They  have  been  dealing  double  with  you.  Some- 
body, I  will  not  say  who,  has  been  carrying  water  on  both  shoulders.  It 
is  of  no  use  fur  me  to  go  down  with  you,  and  I  think  I  will  not  go."  I 
understood,  at  once,  of  course,  what  had  transpired.  He  said  no  more  to 
nie  on  the  subject,  and  shortly  after  left,  and  I  went  very  soon  to  the  Cus- 
tom House.  On  inquiring,  I  was  told  that  the  Custom  House  officers,  the 
collector  and  others,  were  in  a  private  room,  I  think  connected  with  the 
naval  office.  I  went  there  and  found  the  collector,  the  surveyor,  the  naval 
officer,  ^fr.  Jayne  and  another  person  in  the  room.  Mr.  Jayne  said  to  me 
when  I  came,  "  Judge,  we  have  sent  for  you  to  inquire " 

Mr.  Dawes. — Do  you  recollect  who  that  other  person  was? 

Mr.  Davis. — I  do  not  think  I  ought  to  name  him,  except  to  say  that  it 
was  not  the  person  whom  you  possibly  suppose  it  was.  It  was  not  Mr. 
Butler.  It  was  a  gentleman  who,  I  presume,  had  no  connection  with  the 
case.     I  have  no  personal  reasons  for  not  naming  him. 


104  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Dawes. — I  had  no  reason  for  intimating  in  the  inquiry  which  ]  made 
that  I  supposed  it  was  General  Butler. 

Mr.  Davis. — I  suppose  not;  however,  it  was  not  Genertil  Butler.  It  was 
a  gentleman  who  w^as,  I  suppose,  present  by  accident,  and  whose  name 
has  not  been  mentioned  in  this  matter,  to  my  knowledge.  1  presume  that 
he  had  no  connection  with  the  case.* 

Mr.  Jayne  told  me  that  they  wanted  information  as  to  what  had  been 
the  ruling  of  the  courts  under  the  statute  of  1863  in  regard  to  the  conse- 
quences of  the  violation  of  the  statute — whether  it  affected  the  whole  in- 
voice or  whether  a  portion  of  the  invoice  only,  as  to  which  frauds  were 
alleged,  could  be  treated  as  forfeited.  This  is  the  substance  of  the  question 
which  he  suggested.  I  said  to  these  ofiBcers  then  present,  "  Gentlemen,  I 
am  willing  to  give  you  any  advice  that  you  may  think  proper  to  call  on 
me  for,  but  with  this  understanding,  I  want  to  be  distinctly  understood, 
before  I  say  a  word  more  about  this  case,  that  I  will  not  have  any  connec- 
tion with  any  fee.  The  fee  is  to  go  entirely  to  my  successor,  whether  the 
case  is  settled  to-day  or  hereafter.  L  will  have  nothing  to  do  w-ith  that." 
I  then  said,  ''Now  I  will  answer  your  question,  so  far  as  I  understand  the 
decisions.  They  are  to  the  effect  that  the  entire  invoice  is  to  be  treated  as 
forfeited,  although  I  have  understood  that  a  decision  has  been  made  by 
Judge  Clifford,  in  some  case  in  Maine  (an  opinion  which  1  have  never  seen), 
that  the  forfeiture  may  be  treated  as  limited  to  the  articles  actually  affected.'^ 
I  recollect  that  I  went  on  further  to  say  that,  in  my  judgment,  that  would 
be  the  common  law  construction  of  the  statute. 

Mr.  Dawes. — What  would  be  the  common  law  construction  ? 

^[r.  Davis. — The  common  law  construction  would  be,  in  the  milder  sense, 
in  case  of  doubt  applying  it  to  the  forfeiture  of  the  things  actually  affected; 
but  that  the  construction  which  the  judges  have  always  given  to  the  rev- 
enue law  was  that  it  was  to  be  more  strictly  construed  for  the  benefit  of 
the  revenue. 

I  recollect  that  I  referred  to  the  Cliquot  wine  cases,  in  which  the  court 
discussed  the  question  as  to  the  proper  construction  to  be  given.  I  said  to, 
those  gentlemen  also,  "  Now,  feeling  myself  entirely  disembarrassed  of  all 
interest  in  regard  to  fees  in  this  case,  I  will  also  say  to  you  that  those 
gentlemen  (the  counsel  for  Phelps,  Dodge  &  Co.,  whom  J  had  seen  in  pass- 
ing below)  are  extremely  anxious,, as  it  seems,  to  have  this  matter  com- 

.  I        'id    |I  U  I         '  . 

♦Reference,  contrary  to  Judge  Davis'  sftpposition,  liad  been  previously  made  during  the 
liearing  to  the  circumstance  that  Roscoe  Conkling,  a  Senator  of  the  United  States  from  the 
State  of  New  York,  was  present  at  one  or  more  of  the  conferences  of  the  Custom  House  oflS- 
cials  in  reference  to  the  settlement  of  tlio  case  of  Phelps,  Dodge  &  Co. 


AN  EXTRAORDINARY  HISTORY.  105 

promised  on  the  terms  proposed,  and  I  want  to  say  to  you  gentlemen,  who 
are  interested  in  this  question,  that  in  my  judgment,  if  you  are  governed 
by  your  own  interests,  you  had  better  accept  the  sum  offered,  for  no  jury 
on  earth  will  ever  give  a  verdict  in  this  case  for  any  such  sum  or  for  a 
tithe  of  it,  and  probably  no  jury  will  ever  give  a  verdict  in  the  case  favor- 
able to  the  Government  unless  on  special  direction  of  the  court,"  and  1  gave 
my  reasons  for  that  opinion.  On  my  way  out  I  saw  the  counsel  for  Phelps, 
Dodge  &  Co.,  Mr.  Wakeman  and  Mr.  Knox,  and  I  said  to  them,  "  Gentle- 
men, your  case  is  not  going  to  be  settled  to-day."  "  Not  settled!"  said  Mr. 
Wakeman,  "  I  think  it  is."  "  Certainly  it  is  not,"  I  said.  They  persisted 
in  wanting  to  know  why,  and  I  told  them  there  had  been  some  hitch  in  the 
matter  about  the  fees  of  the  district  attorney;  but  that  I  had  seen  those 
gentlemen  and  had  told  them  that  I  would  have  nothing  whatever  to  do  with 
the  fees,  and  therefore  supposed  that  I  had  removed  that  obstacle,  if  it  was 
one.  I  said,  "  If  you  can  induce  them  to  accept  your  offer  of  compromise, 
well  and  good.  I  have  nothing  to  do  with  the  fees."  Mr.  Wakeman  said 
that  that^was  a  very  great  injustice  toward  me,  and  that  it  should  not  oc- 
cur; that  the  case  was  going  to  be  settled,  and  that  I  should  have  the  fee. 
I  said,  "  I  have  nothing  more  to  do  with  the  matter,  and  shall  have  no  fee 
in  the  case."  He  said,  "You  shall  have  a  fee  in  the  case,  even  if  we  have 
to  pay  it  ourselves.  We  would  rather  pay  a  double  fee  than  to  have  you, 
after  the  connection  you  have  had  with  the  case,  treated  in  that  manner." 
I  said,  "  No,  nobody  is  under  any  obligations  to  pay  me  any  fee."  I  went 
to  my  office  and  heard  nothing  more  of  the  case  until  I  heard  subsequently 
to  the  2d  of  January  (the  1st  of  January  being  a  holiday),  that  a  letter 
had  been  sent  to  the  district  attorney  to  commence  a  suit  for  a  million  of 
dollars,  and  that  an  offer  of  compromi.«;e  had  been  sent  in  to  pay  $260,000. 
I  went  to  my  judicial  duties  after  the  1st  of  January,  and  had  nothing  more 
to  do  with  the  case.  I  saw  neither  of  the  counsel  nor  any  one  else  con- 
nected with  it  until  some  days  afterward;  Mr.  Dodge  came  to  my  house  de- 
siring to  talk  with  me  about  the  case.  I  said  to  him,  "  Mr.  Dodge,  you 
know  that  my  relations  to  the  case  have  been  those  of  attorney  for  the  Gov- 
ment,  and  of  course  I  can  give  you  no  advice,  as  counsel,  and  can  say 
nothing  about  it  in  any  professional  capacity  at  all."  But  after  he  had 
talked  the  matter  over  very  freely,  giving  me  his  version  of  the  case,  and 
stating  the  facts  as  he  claimed  them  to  be,  I  said  to  him,  "  Mr.  Dodge,  while, 
as  I  told  you,  I  cannot  give  you  any  advice  as  counsel,  I  will  say  this  to 
you,  precisely  as  I  would  if  you  were  my  own  brother,  that  I  think  you 
ought  not  to  pay  one  cent  in  this  case,  and  in  justice  to  yourself  and  your 
house  you  ought  to  fight  it  out  to  the  end."  He  then  gave  me  his  reasons 
for  going  on  with  the  settlement. 


106  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

That  ends  my  connection  with  the  case  almost  entirely.  1  do  not  recol- 
lect hearing  anything  more  of  any  consequence  about  it  until  I  was  re- 
quested by  Mr.  Dodge,  after  the  settlement  had  been  made,  to  write  a  letter, 
which  letter  I  wrote  and  it  was  published.  I  have  omitted,  however,  to 
state  one  thing,  and  that  is,  that  in  the  examination  of  the  papers  at  the 
Astor  House,  I  asked  Mr.  Jayne  if  he  could  show  me  how  much  had  actu- 
ally been  lost  to  the  Government  by  reason  of  these  violations  of  the  law. 
He  said  that  he  could,  and  he  figured  it  out,  and  said  that  it  was  sixteen 
hundred  and  odd  dollars.  I  snid  to  him  that  I  was  surprised  that  the 
amount  should  turn  out  to  be  so  small,  and  that  it  seemed  to  me  that  the 
Government  would  have  the  greatest  difficulty,  if  those  gentlemen  choose  to 
contest  the  case,  to  recover,  before  a  jury,  under  those  charges,  unless  the 
court  should  direct  the  verdict  for  the  violations  of  the  statute;  and  that 
was  one  ground  on  which  I  said  to  the  gentlemen  at  the  Custom  House  that 
in  my  judgment  no  jury  would  give  a  verdict  in  the  case. 

I  wish  to  add  that  I  have  on  no  occasion,  except  the  one  which  I  have 
mentioned  to  you,  had  any  conversation  whatever  with  Mr.  Bliss  about  the 
case,  and  I  never  made  any  sugjjestion  or  intimation  about  the  fee  to  him, 
except  as  I  have  stated  here.     I  made  no  allusion  to  his  fee,  and  I  had  no 
idea  at  the  time  that  the  conversation  occurred  in  my  office  when  I  sug- 
gested to  him  to  go  dowu  with  me  to  the  Custom  House  and  participate  in 
closing  up  the  case  (which  I  supposed  would  be  done)  and  take  half  the 
fee,  that  he  knew  anything  about  the  settlement  of  the  case.     How  Mr.  Bliss 
can  believe  (as  I  judge  he  does,  from  what  he  stated  to  this  Committee) 
that  I  had  proposed  that  I  should  share  his  fee  with  him,  is  very  surprising 
to  me.     He   may  possibly  justify  himself,  from  the    face   (a  fact  which   I 
learned  after  that  interview,  but  not  till  the  next  day)  that  he  had  that 
morning,  before  coming  into  my  room,  gone  to  the  Judge,  whether  in  his 
private  room  or  in  the  court  room  I  am  not  advised,  and  taken  the  official 
oath,  which  fact  Mr.  Bliss  did  not  mention  to  mo,  nor  had  I  the  least  idea  of 
it.     The  custom  has  always  been  in  that  office  for  the   outgoing  incumbent 
to  take  the  commission  sent  to  the  new  appointee  and  present  it  to  the  court, 
introducing  his  successor,  and  move  that  the  oath  be  administered  to  him. 
That  was   done  in  my  case  by  Judge  Picrrcpont,  and  I  am  told  that  it  has 
been   done  in  the    cases  of  my  predecessors;  but  in   this  case,  as  I  have 
stated,  I  am  informed  that  Mr.  Bliss  went  in  the  morning,  before  I  came  to 
the  office,  and  took  the  oath.     He  made  no  mention  of  it,  however,  to  me, 
and  no  conversation  was  ever  at  any  time  had  botwoen  us  in  reference  to 
his  taking  or  delaying  to  take  the  office,  till  the  first  of  January,  when  ray 
resignation  was  to  take  effect.     I  went  through  with  all  the  duties  and  all 
the  business  of  that  day  without  the  slightest  intimation  or  idea  that  any- 


AN  EXTRAORDINARY  HISTORY.  107 

body  else  was  the  officer,  either  dejure  or  de  facto.  I  never  dreamed  of  it 
and  it  has  been  suggested  to  me  that  Mr.  Bliss  gets  the  idea  that  I  offered 
to  share  his  fee  from  the  fact  that  he  had  taken  the  oath  in  that  manner  be- 
fore he  came  to  see  me. 

You  will  have  seen,  of  course,  from  this  statement  that  all  the  know- 
ledge I  had  of  the  Phelps,  Dodge  &  Co.  case,  while  I  was  district 
attorney,  was  predicated  on  the  affidavit  of  this  clerk  of  theirs  (about 
whom  I  know  nothing  ;  I  had  never  heard  of  the  person  before;  but  it 
turns  out  that  Jie  was  an  individual  whose  credibility  would  have  been 
greatly  shaken  before  a  jury).  The  papers  in  the  Custom  House,  and 
those  which  were  exhibited  by  Mr.  Jayne  at  the  time  of  the  statement 
made  to  me  by  Mr.  Jayne  at  the  Astor  House,  I  had  never  seen,  and 
did  not  know  that,  in  point  of  fact,  the  error  in  their  case  was  of  a 
character  which  ran  through  all  similar  entries,  and  that  the  valuation 
of  the  goods  had  operated  in  other  cases  in  such  a  manner  that  the 
price  stated  in  the  invoice  was  much  larger  than  the  actual  cost,  and  in 
such  cases  had  produced  a  probable  over  payment  of  duties.  But,  before 
I  wrote  my  letter,  these  facts  were  laid  before  me.  It  appeared  in  sub- 
stance, as  I  understood  it  then  and  as  I  still  understand  it,  that  goods  had 
been  purchased  on  long  contracts,  some  of  them  in  Wales,  to  be  delivered 
in  Liverpool  at  stipulated  prices,  covering  the  whole  period  of  the  contract; 
but  that  the  foreign  house  of  Phelps,  Dodge  &  Co.,  as  those  goods  were 
shipped,  had  adopted  and  entered  in  the  invoices  the  market  valuation  at 
the  time  of  shipment  instead  of  stating  the  actual  cost,  and  that  the  effect 
of  doing  .so  had  been,  in  those  instances  in  which  a  forfeiture  was 
claimed,  that  they  had  stated  a  valuation  less  than  the  actual  cost,  while 
in  the  great  bulk  of  the  business  of  that  character  the  market  valuation  as 
invoiced  was  very  considerably  more  than  the  actual  cost ;  so  that,  in 
carrying  out  the  principle  of  valuation  they  adopted,  the  result  was, 
taking  the  whole  course  of  business  into  account,  that  the  Government 
received,  on  the  valuations  adopted  by  them,  a  far  greater  amount  of 
duties  than  it  would  have  received  on  the  actual  cost  of  the  goods.  Now, 
us  I  understand  the  law,  they  were  bound  to  state  in  their  invoices  the 
actual  cost,  and  they  were  bound  also,  if  the  actual  cost  did  not  equal  the 
market  value,  to  add  to  it  so  as  to  make  it  market  value. 

The  Chairman. — They  were  to  add  it  in  the  entry  so  as  to  make  up  the 
market  value? 

Mr.  Davis. — Yes,  they  were  to  do  so  when  they  came  to  make  the  entry; 
otherwise,  if  the  appraiser  found  that  the  price  stated  in  the  invoice  was 
10  per  cent,  less  than  the  actual  value,  he  would  be  at  liberty  to  add  that 
10  per  cent.,  and  to  add  the  penalty  of  20  per  cent,  besides. 


108  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  BuRCHARD. — Is  not  that  the  extent  of  the  penalty  ? 

Mr.  Davis. — That  is  the  extent  of  the  penalty  that  the  appraiser  can  add. 

Mr.  BuRCHARD. — If  they  make  no  addition  to  tiie  actual  cost,  so  as  to  make 
market  value,  is  there  any  other  penalty? 

Mr.  Davis. — Perhaps  that  may  be  said  to  be  so  in  a  case  where  the  law 
requires  the  market  value  to  be  stated  ;  but  in  cases  of  goods  purchased, 
the  law  requires  the  cost  to  be  stated.  Now,  in  these  cases  they  must 
make  market  value  by  making  an  addition  to  the  cost  value  ;  and  they  are 
subject  to  the  penalty  of  20  per  cent,  if  the}^  do  not  do  so,  and  if  the  appraiser 
finds  that  the  price  stated  is  10  per  cent,  below  market  value.  Now,  prac- 
tically, these  gentlemen  are  right  in  saying  that  they  have  paid  more  than 
they  would  have  paid  if  they  had  put  in  their  goods  always  at  cost,  because 
the  ordinary  rule  at  the  appraiser's  office,  in  the  great  bulk  of  cases,  is,  that 
the  invoice  cost  is  generally  taken  as  the  market  value  ;  especially  is  it  so 
taken  unless  the  advance  exceeds  10  per  cent.  Now,  the  difficulty  in  these 
cases  wherein  these  gentlemen  have  violated  the  law  occurs  right  here. 
A  merchant  who  buys  his  goods  and  enters  them  as  his  own  is  bound  to 
state  the  actual  cost  upon  his  invoices  ;  yet  the  statute  provides  that 
if  there  is  an  advance  in  value  that  advance  must  be  added  to  make  the 
basis  of  duty.  The  duties  in  all  cases  are  leviable  on  the  actual  market 
value  at  the  time  of  shipment,  as  I  understand  the  law  ;  and  so,  where  the 
goods  have  cost  a  certain  price,  if  the  actual  value  at  the  time  of  the  ship- 
ment be  a  higher  price,  that  higher  price  is  the  basis  of  the  duty,  and  the 
law  enjoins  that  the  invoice  shall  state  the  actual  cost,  and  it  provides  that 
while  the  advance  shall  be  added  to  get  at  the  assessable  value,  yet  in  case 
the  goods  have  depreciated  so  that  the  market  value  is  less  than 
cost,  the  actually  stated  cost  shall  be  taken  as  the  basis  of  duties,  and 
the  merchant  gets  no  advantage  in  reduction  of  duties  from  the  fall  of 
prices. 

I  would  now,  while  I  think  of  it,  like  to  suggest  to  the  Committee 
whether  it  would  not  be  just  and  right  that  that  law  should  be  changed. 
These  gentlemen  in  these  diflferent  cases  have  entered  their  goods,  in  some 
instances  taking  the  market  value  at  a  little  less  than  the  cost,  because  the 
market  value  had  dropped.  But  the  law  requires  them  to  state  the  cost, 
and  requires  that  the  duty  shall  be  levied  on  that  cost,  although  the  actual 
market  value  is  less.  And  there  is  precisely  the  point  in  which  these 
parties  did  an  act  which  subjected  them  to  the  consequences  of  violating 
the  law,  because  it  was  a  violation  of  the  law  to  enter  goods  at  a  market 
value  which  was  below  the  actual  cost  when  the  statute  required  that 
the  cost  should  be  given  in  the  invoice,  and  that  such  cost  should  be  the 
basis  of  duty. 


AN  EXTRAORDINARY  HISTORY.  109 

Mr,  BuRCHARD. — I  understand  that  they  claim  that  the  invoices  were 
the  actual  cost,  and  that  the  memoranda  were  memoranda  of  the  market 
price. 

Mr.  Davis. — No,  sir;  the  other  way.  The  invoices  stated  the  actual  mar- 
ket value.  They  conformed  to  the  spirit  of  the  law,  which  is  to  give  actual 
market  value  as  the  basis.  But  this  statute,  which  requires  the  cost 
to  be  stated,  puts  the  merchant  in  this  position  :  For  instance,  Phelps, 
Dodge  &  Co.  have  contracts  for  tin  made  on  the  1st  of  January  at  a 
specific  price;  that  tin  is  deliverable  in  Liverpool  as  fast  as  manufactured; 
there  comes  an  invoice  of  it  from  Wales  to  Liverpool  on  the  1st  of  July  at 
the  cost  which  was  agreed  to  be  paid  in  January;  they  are  bound  to  enter 
that  cost  price  in  their  invoices  instead  of  the  market  value  on  the  1st  of 
July.  Now,  the  same  tin  may  have  fallen  off  in  value  so  that  a  competitor 
in  the  same  market  can  buy  it  on  the  1st  of  July  at  50  per  cent,  less  than 
Phelps,  Dodge  &  Co.  have  contracted  to  pay  for  it.  That  competitor  sends 
his  goods  on  by  the  same  ship  which  brings  the  goods  of  Phelps,  Dodge  & 
Co.  The  latter  are  bound  by  law  to  enter  their  goods  at  the  cost  price, 
and  are  bound  to  pay  duties  on  that  price;  while  the  other  merchant,  who 
is  bound  by  the  same  law  to  enter  his  at  cost,  enters  them  at  a  cost  of  50 
per  cent,  less  than  Phelps,  Dodge  &  Co.  And  thus  Phelps,  Dodge  &  Co. 
are  obliged  to  come  into  the  market  and  compete  with  a  man  who  ships 
his  tin  at  the  same  time,  and  pays  60  per  cent,  less  for  it,  and  gets  his 
duties  estimated  on  50  per  cent,  less  value  than  Phelps,  Dodge  &  Co.  can 
have  theirs.  Now,  that  operates  with  great  hardship  at  times  on  mer- 
chants, and  it  seems  to  me  that  that  provision  of  the  statute  ought  to  be 
abrogated.  As  I  understand  the  statute,  it  is  a  mistake  to  suppose 
that  where  the  party  has  stated  in  his  invoice  actual  cost,  he  can,  at 
any  time  afterward,  change  it.  The  law  says  he  must  do  it  at  the  time 
of  the  entry. 

Mr.  Sheldon. — What  would  you  make  the  basis  of  duties. 

Mr.  Davis. — The  only  true,  sensible  basis  is  market  value  at  the  time  of 
shipment  when  the  duties  are  ad  valorem :  otherwise  the  man  who  buys 
his  goods  ten  days  before  another  man,  yet  ships  them  by  the  same  vessel,  may 
find  a  competitor  when  he  reaches  New  York,  who,  from  the  market  having 
fallen  within  tiiose  ten  days,  can  undersell  him,  say  20  per  cent.,  because 
of  the  less  duty  which  the  latter  has  to  pay.  These  gentlemen,  in  ray 
judgment,  were  led  into  the  error  which  they  committed  (and  which  was 
a  plain,  palpable  violation  of  the  statute)  by  the  idea  which  their  foreign 
correspondent  had,  which  they  did  not  know  enough  of  the  law  to  be 
able  to  correct ;  and  probably  also  by  the  suggestion  of  the  consul  in 
Liverpool,  that  if  they  gave  the  actual  market  value  they  were   doing  what 


110  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

the  law  required.  They  u-ere  doing  what  justice  and  equity  required,  but 
they  were  plainly  violating  the  statute.  Now,  a  good  deal  has  been  said 
upon  the  point  that  if  these  gentlemen  were  not  guilty  of  actual  fraud  they 
were  not  liable  to  a  penalty.  It  does  not  follow  at  all  that  there  must  be 
actual  intentional  fraud  proved  under  our  revenue  laws  in  order  to  make 
out  a  case  of  forfeiture.  It  is  only  required  that  a  man  shall  knowingly 
do  the  forbidden  act.  If  he  knows  when  he  does  the  forbidden  act 
that  he  is  doing  that  ac^t,  the  law  attaches  the  penalty.  This  may  be 
illustrated  by  the  law  relating  to  usury.  A  man,  for  instance,  comes 
into  our  State  from  Illinois,  lends  $1,000,  and  draws  a  note  by  which 
the  borrower  agrees  to  pay  him  iO  per  cent. — as  he  may  properly  do 
in  Illinois.  He  has  no  intention  whatever  to  violate  the  statutes  of  New 
York,  yet  he  does  violate  it,  and  the  penalty  attaches  because  he  knew 
when  he  drew  the  note,  reserving  10  per  cent.,  that  he  did  that  act. 

Mr.  Wood. — Although  he  did  not  know  the  penalties  for  usury  in  New 
York  ? 

Mr.  Davis. — Yes.  The  law  assumes  that  every  man  knows  the  law  and 
the  penalties  it  imposes  for  any  act  which  he  knowingly  does,  whether  the 
man  does  know  it  or  not. 

Mr.  NiBLACK. — That  is  the  best  illustration  of  the  case  that  we  have  had. 

Mr.  Davis. — In  reading  Mr.  Bliss's  statement,  I  find  that  he  refers  to  a 
case  where  he  says  two  verdicts  had  been  obtained  against  a  house  in  New 
York  for  $102,000,  and  that  the  Secretary  of  the  Treasury  remitted  the 
whole  sum.  Mr.  Bliss  is  mistaken  in  the  facts  of  the  case.  That  was  a 
case  that  was  disposed  of  in  my  term.  The  case  came  on  for  trial  before 
Judge  Blatchford.  It  was  on  the  calendar  and  was  moved.  The  defend- 
ants struggled  to  postpone  it,  but  the  Judge,  on  hearing  the  argument  on 
both  sides  (I  was  not  present,  but  it  was  tried  by  my  assistant),  refused  to 
postpone  the  case.  Thereupon  the  defendants'  counsel  retired  and  left  the 
case  to  go  by  default.  The  case  was  tried  then  in  the  nature  of  an  inquest, 
without  any  opposition  from  the  other  side.  Judge  Blatchford  sent  it  to 
the  jury,  there  being  nobody  to  say  anything  for  the  defendants  in  the 
case;  but  the  jury  disagreed,  and  would  not  give  a  verdict  for  the  Govern- 
ment. That  case  came  on  trial  again  two  weeks  afterward,  and  then  the 
defendants  appeared  with  very  able  counsel,  and  I  went  in  and  tried  the 
case  myself — the  trial  occupying  about  a  week. 

Mr.  DAWEs.-^Was  the  default  taken  off? 

Mr.  Davis. — No  objection  was  made  to  their  coming  in.  We  treated  it 
as  though  the  case  had  never  been  before  a  jury  at  all.  We  tried  the  case 
very  thoroughly.  It  was  contested  on  the  other  side  by  a  very  able  law- 
yer, much  superior  to  myself,  and  when  the  case   rested,  the  jury  was 


AN  EXTRAORDINARY  HISTORY.  Ill 

ready  to  beat  the  Government  beyond  any  doubt;  but  I  moved  for  a  direc- 
tion on  the  part  of  the  Judge,  on  the  legal  proposition  that  those  parties 
had  done  the  acts  knowingly,  by  means  of  invoices  which  were  not  true, 
and  must  take  the  consequences  of  violating  the  law,  unlef^s  the  Secretary 
of  the  Treasury  saw  fit  to  relieve  them. 

The  Judge  held  that  the  proposition  was  sound,  and  he  directed  a  verdict 
on  my  motion,  after  hearing  argument.  That  was  the  case  which  the 
Secretary  remitted,  and  in  which  he  did  entirely  right.  The  remission 
took  place  after  1  left  office,  but  1  was  entirely  satisfied  that  it  was  a  mo^t 
proper  thing  to  be  done,  because,  while  these  gentlemen  had  rendered 
themselves  obnoxious  to  the  penalties  of  the  statutes,  they  had  never  in- 
tended to  defraud  the  Government.  That  was  the  case  which  Mr.  Bliss  de- 
scribed as  a  case  in  which,  after  two  verdicts  by  u  jury,  the  Secretary  re- 
mitted the  penalty.  There  was  no  verdict  of  a  jury,  in  the  sense  in  which 
he  applied  that  term,  because  the  verdict  was  directed  by  the  Judge.  Now, 
on  that  subject  1  would  like  to  make  a  suggestion,  which  is,  that  in  refer- 
ence to  that  class  of  cases,  if  the  law  is  to  stand  as  it  now  is,  or  substan- 
tially as  it  now  is,  there  ought  to  be  a  provision  of  law  to  this  eflect,  that  in 
all  cases  tried  before  a  court  and  jury,  on  a  question  of  alleged  fraud  upon 
the  revenue,  it  shall  be  the  duty  of  the  court  to  submit  to  the  jury  as  a 
distinct  proposition:  Were  the  parties  guilty  of  actual  intent  to  defraud 
the  Government  'i  And  if  the  jury  find  in  such  a  case  that  the  parties  were 
so  guilty,  there  should  be  no  power  of  remission  whatever;  but  when  it 
is  found  that  there  was  actual  intent  to  defraud,  the  penalty  should  be  en- 
forced by  way  of  example.  This  rule  should  apply  to  all  cases  where  the 
Judge  feels  bound  to  direct  a  verdict  under  the  law  (as  in  the  case  which  I 
have  just  alluded  to),  where  the  Judge  should  say  to  the  jury,  when  directing 
the  verdict,  "  Gentlemen,  I  am  obliged,  as  a  question  of  law,  to  say  that 
the  statute  has  been  violated,  and  that  there  must  be  a  verdict  for  the 
Government;  yet  you  are  to  retire  and  determine  the  question  of  actual 
fraud."  If  the  jury  in  the  case  I  spoke  of  had  been  so  charged  it  never 
would  have  found  the  parties  guilty. 

The  Chairman. — Would  not  the  insertion  after  the  word  "  knowingly,"  in 
the  statute,  of  the  words  "  with  intent  to  defraud  the  revenues,"  cover  the 
case  ? 

Mr.  Davis. — Perhaps  it  would,  but  it  will  be  open  to  question.  If,  how- 
ever, you  provide  that  on  the  trial  of  such  cases,  the  Judge  shall  submit 
the  question  of  actual  fraud  to  the  jury,  even  in  cases  where  he  is  bound 
to  direct  a  verdict  for  the  Government,  you  will  save  the  whole  thing.  Then 
if  the  jury  find  that  there  was  fraud,  the  Secretary  should  have  no  power 
over  the  case,  because  then  he  would  be  reviewing  the  verdict  of  a  jury. 


112  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Beck. — In  the  case  to  which  you  have  just  referred,  in  which  the 
Judge  directed  the  jury  to  find  a  verdict  for  the  United  States,  did  he  also 
direct  the  jury  to  pass  on  the  question  of  actual  fraud? 

Mr.  Davis. — No,  sir;  not  at  all.  1  said  that  if  the  Judge  had  done  so  in 
that  case,  the  verdict  would  have  been  different.  The  courts  are  bound,  in 
enforcing  statutes,  to  order  verdicts  in  cases  where  the  parties  knowingly 
do  the  acts  which  are  a  violation  of  the  statute.  We  have  just  had  a  case 
in  our  own  State  of  that  kind.  A  poor  man  who  was  entirely  out  of  em- 
ployment had  a  friend  who  had  been  appointed  inspector  of  elections.  Our 
statute  provides  that  if  any  person,  not  being  an  inspector  of  elections, 
shall  put  into  a  ballot  box  any  vote  or  votes,  he  shall  be  guilty  of  felony. 
Now  the  man  who  was  actually  appointed  inspector  thought  that  he  could 
help  his  friend  by  having  him  do  the  duty  and  receive  the  compensation. 
He  went  to  a  lawyer,  who  drew  a  power  of  attorney  providing  that,  in  the 
name  of  this  first  party,  the  second  party  should  go  and  act  as  inspector 
and  perform  all  the  duties  of  that  office. 

The  man  went  and  attended  to  the  duty,  acting  fairly  enougli,  and  no- 
body found  any  fault  with  him  until  about  the  middle  of  the  afternoon. 
He  had  acted  so  well,  it  seems,  that  the  chairman  of  the  judges  of  election, 
when  he  went  to  dinner,  appointed  him  temporary  chairman.  Then  some- 
body who  came  to  the  polls  said  he  was  not  the  man  who  was  appointed 
inspector;  the  police  officer  immediately  arrested  him.  The  man  said,  "I 
know  that  that  is  not  my  real  name,  but  I  am  acting  under  a  power  of  at- 
torney." This  man  was  indicted  for  felony,  and  the  Judge  submitted  to  the 
jury  simply  the  question  whether  he  did  the  act  of  putting  in  ballots,  and 
whether  he  knew  he  was  doing  the  act.  Of  course,  the  jury  found  that 
the  man  was  guilty.  The  case  went  to  the  General  Term,  and  the  General 
Term  was  obliged  to  affirm  the  decision  below.  But  we  all  united  in  asking 
the  Governor  to.  pardon  him,  which  the  Governor  immediately  did.  That 
illustrates  the  position  in  which  the  courts  are  sometimes  put  in  regard  to 
the  enforcement  of  statutes.  For  that  reason  I  have  made  the  suggestion, 
to  ameliorate  the  hardships  of  the  case,  that  where  a  Judge  is  bound  to 
direct  a  verdict,  because  the  act  forbidden  has  been  knowingly  done  by  the 
pa.rty  without  his  knowing  or  considering  the  law  and  its  consequences, 
and  is  yet  a  plain  violation  of  a  revenue  statute,  the  court  shail  also  sub- 
mit the  question  of  guilty  intent  to  defraud. 

The  Chairman. — Have  you  concluded  your  statement  ? 

Mr.  Davis. — With  this  exception:  I  should  like  to  say,  in  reference  to  the 
Phelps,  Dodge  &  Co.  case,  that  I  have  never,  either  directly  or  indirectly, 
in  any  form  or  manner  whatever,  received  one  penny  of  fee  from  any  human 
being.     I  should  not  have  alluded  to  what  the  counsel  for  Phelps,  Dodge  & 


AN  EXTRAORDINARY  HISTORY.  113 

Co.  said  to  me  in  regard  to  the  fee,  if  I  had  not  seen  that  Mr.  Bliss  said  that 
.some  such  suggestion  was  made  to  him — that  a  fee  should  be  paid  to  me  in 
addition  to  one  to  him.  I  have  also  this  to  say,  that  on  two  or  three  occa- 
.-ions  after  that,  Mr.  Knox,  who  treated  the  matter  with  the  utmost  fairness 
and  kindness  toward  me,  said  to  me,  without  speaking  of  it  directly,  "We 
I  expect  to  carry  out  that  suggestion  of  ours,"  or  something  >j  that  effect. 
Hut  a  few  days  after  I  made  my  statement  in  the  letter  which  has  been 
published,  I  met  Mr.  Dodge  on  the  cars — it  was  the  first  time  I  had  met 
liim  after  the  settlement  was  completed — and  I  asked  him  whether  any  ar- 
rangement of  that  kind  had  been  made,  or  whether  any  money  had  been 
paid  to  his  counsel  with  any  such  view,  and  he  said  "  No."  I  then  told 
him  that,  from  what  had  been  said,  I  had  got  an  impression  that  possibly 
something  might  have  been  paid  into  the  hands  of  his  counsel  with  such  a 
view,  but  I  wanted  him  to  understand  distinctly  that,  under  no  circum- 
stances, should  I  receive  anything.  I  desire  to  say  that,  because  the  im- 
pression has  been  thrown  out  that  I  have  been  animated  in  wlmt  1  have 
(lone,  especially  in  writing  that  letter,  which  seems  to  have  given  offence, 
and  in  which  I  stated  that,  in  my  judgment,  Phelps,  Dodge  &  Co.  had  not 
l)een  guilty  of  actual  fraud,  by  the  loss  of  the  fee. 

On  the  subsequent  day  (March  20th),  in  reappearing  before  the  Commit- 
tee to  discuss  the  subject  of  moieties  in  general,  Judge  Davis  prefaced 
his  remarks  with  the  following  additional  statement: 

I  do  not  know  that  I  said  yesterday,  but  I  would  like  to  say  now,  that, 
at  the  first  meeting  at  Jayne's  ofiice,  of  which  I  spoke,  Mr.  Dodge  declared 
his  readiness  to  pay  any  duties  which  the  Government  had  lost  by  reason 
of  any  errors,  or  mistakes,  or  oversights  of  his  firm,  and  also  any  penalties 
that  might  have  been  incurred.  He  made  that  proposition,  and  it  is  due  to 
him  to  say  that  on  that  occasion  he  was  under  very  great  agitation  and  ex- 
citement, this  thing  coming  upon  him,  as  he  described  it  himself,  like  a 
thunderbolt. 

On  the  completion  of  his  remarks  on  the  subject  of  moieties  Judge  Davis 
was  further  examined  by  the  Committee  in  respect  to  Messrs.  Phelps,  Dodge 
it  Co.'s  matters  as  follows: 

Mr.  Dawes. — As  there  is  some  difference  between  your  statement  and  that 
of  Mr.  Bliss,  I  desire  you  to  be  a  little  particular  in  the  matter.     Can  you 
tell  me  about  the  date  of  your  first  knowledge  of  the  Phelps,  Dodge  <fe  Co^ 
ase  ? 

Mr.  Davis. — I  told  you  yesterday  it  was  eight  or  ten  days  before  the 
close  of  my  term.  I  cannot  give  the  date  any  more  definitely;  yet  there  is 
one  mode  of  fixing  the  exact  date,  and  that  is  the  date  of  the  warrant,  for  my 
attention  was  called  to  the  matter  the  day  before  the  date  of  that  warrant. 

8 


114  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Dawes — Wliat  day  of  tlie  month  was  it  that  you  had  tlic  interview 
with  Mr.  Bliss? 

Mr.  Davis. — The  31st  of  December. 

Mr.  Dawes. — Wliat  time  of  tiie  day  liad  j^ou  that  interview  ? 

Mr.  Davis. — The  interview,  I  think,  was  from  a  little  past  10  o'clock  to  a 
little  past  12  o'clock.  I  am  not  very  definite.  Mr.  Bliss  was  to  be  there  at 
10  o'clock,  and  he  came  a  little  after  that  time. 

Mr.  Dawes. — You  have  stated  that  you  had  not  any  knowledge  at  that 
time  that  Mr.  Bliss  had  qualified  as  district  attorney  ? 

Mr.  Davis. — I  had  not  the  slightest. 

Mr.  Dawes. — How  soon  after  that  did  you  know^  the  fact? 

Mr.  Davis — I  was  told  of  it  the  next  da}^,  which  was  the  1st  of  January. 

Mr.  Dawes.— At  that  interview  in  your  office  who  were  present? 

Mr.  Davis. — Nobody  but  Mr.  Bliss  and  myself.  It  was  in  the  district  at- 
torne3^'s  own  private  room. 

Mr,  Dawes. — After  having  invited  Mr.  Bliss  to  go  down  to  the  Custom 
House  with  you  to  see  the  settlement  of  the  Phelps-Dodge  case,  and  after 
you  offered  him  one  half  of  what  you  supposed  was  your  fee,  you  and  he 
went  down  together? 

Mr.  Davis. — No,  sir;  he  did  not  go.  He  declined  to  go,  saying  that  it 
would  be  of  no  use. 

Mr.  Dawes. — Repeat,  in  that  connection,  what  jon  stated  yesterday  was 
his  answer  to  you  when  )0u  made  this  proposition  to  him. 

Mr,  Davis. — After  I  made  him  this  proposition  Mr,  Bliss  sat  a  moment 
looking,  as  I  said  yesterday,  very  much  surprised.  He  looked  as  though  he 
was  hesitating  what  to  say.  He  then  arose  and  stepped  to  the  mantel  (it 
is  a  small  room),  leaned  his  elbow  on  the  mantel,  and  turned  around  to  me 
and  said,  "Now  that  you  have  made  me  that  proposition,  I  feel  bound  to 
say  to  you  that  this  case  is  not  going  to  be  closed  to-day.  1  was  informed, 
last  night,  of  what  took  place  at  the  Astor  House,  and  I  was  at  the  Collec- 
tor's house  up  to  a  late  hour.  Those  people,  or  those  persons,  have  been 
playing  double  with  you.  Somebody,  and  I  will  not  tell  you  who,  has 
been  carrying  water  on  both  shoulders,  and  I  say  to  you  that  the  case  i.< 
not  going  to  be  settled.  It  is  no  use  in  going  down,  and  I  think  1  will  not 
go."  The.-e  are,  if  not  the  exact  words,  as  near  them  as  it  is  practicable  for 
one  man  to  repeat  the  language  of  another.  They  made  a  very  decided 
impression  upon  my  mind  at  the  moment. 

Mr.  Dawes. — You  thereupon  went  down  yourself? 

Mr.  Davis. — A  little  after  Mr.  Bliss  went  away. 

Mr.  Dawes. — When  did  you  go  ? 

Mr.  Davis. — I  first  went  to  the  door  of  Mr.  Jayne's  room,  and  inquired  for 


AN  EXTRAORDINARY  HISTORY.  .  115 

Mr.  Jay.ne,  and  was  told  that  he  was  with  those  officers  up  stairs,  in  the 
naval  office.  I  saw  there,  however,  standing  in  the  room,  or  sitting,  I  am 
not  sure  which,  Mr.  Knox  and  Mr.  Wakoman,  counsel  for  Plielps,  Dodge  <k 
Co.  A  few  words  passed  between  them  and  myself  about  the  case,  and  1 
went  up  to  the  naval  officer's  room  and  back  through  the  business  room, 
into  what  I  understood  to  be  the  naval  officer's  private  room — his  own 
office. 

Mr.  Dawes. — Whom  did  you  meet  there  ? 

Mr.  DavIs. — I  saw  Mr.  Jayne;  the  Collector,  General  Arthur;  the  Sur- 
veyor, Mr.  Cornell;  the  Naval  Officer,  Mr.  Laflin,  and  a  gentleman  whose 
name  you  excused  me  from  naming  yesterday. 

Mr.  Dawes. — I  want  to  know  all  the  persons  who  were  there. 

Mr.  Davis. — If  the  Committee  insist  upon  it,  I  can  say  who  were  there. 
I  may  say  that  I  have  no  knowledge  of  this  person  having  any  connection 
with  these  matters. 

Mr.  Dawes. — The  inquiry  is,  if  you  will  be  good  enough  to  tell  us,  whom 
you  met  in  that  room  ? 

Mr.  Davis. — This  person  was  Senator  Conkling. 

Mr.  Dawes. — State,  then,  all — put  them  all  together  in  one  list,  so  that  I 
may  not  be  supposed  to  be  searching  for  one  name.  Give  the  list  of  those 
persons  whom  you  found  in  that  room. 

Mr.  Davis. — The  Collector,  General  Arthur;  the  Surveyor,  Mr.  Cornell;  the 
Xaval  Officer,  Mr.  Laflin;  Senator  Conkling  and  Mr.  Jayne.  I  have  no  re- 
collection of  any  other  i)erson,  tliough  it  is  possible  that  some  of  the  clerks, 
etc.,  might  have  been  in  the  room. 

Mr.  Dawes.^ — Report  as  briefly  as  you  can  what  tran.spired  in  that  room 
while  you  were  there. 

Mr.  Davis. — Before  doing  so  I  ought  to  say  that  in  stating  whac  trans- 
pired in  the  room  yesterday  I  stated  it  briefly,  without  stating  all  that 
transpired.  I  stated  sub.stantially  what  transpired  in  regard  to  the  subject 
matter. 

Mr.  Dawes. — That  is  all  I  desire. 

Mr.  Davis. — There  was  much  more  said  than  1  stated  yesterday.  There 
was  a  discussion. 

Mr.  Dawes. — Give  us  substantially  what  was  said  as  briefly  as  you  can. 

Mr.  Davis. — The  substance,  so  far  as  I  was  connected  with  it,  was  this. 

Mr.  Beck. — You  had  better  state  it  all;  it  will  save  time. 

Mr.  Davis.— I  went  into  the  room  and  spoke  to  these  gentlemen  and  shook 
hands  with  Senator  Conkling,  and,  I  think,  with  all  these  gentlemen.  After 
a  moment  Mr.  Jayne  said,  he  being  the  first  speaker  of  whom  I  have  any 
recollection,    "Judge,    we   want   to   know   what  have  been   the  decisions 


116      .     COXGRESS  AND  PHELPS,  DODGE  &   CO. 

of  the  courts  in  regard  to  the  question,  whether  the  whole  invoice  is  for- 
feited, or  whether  the  particular  articles  affected  by  fraud  may  be  forfeited." 
I  then  said  that  I  was  willing  to  give  any  advice  which  I  could  in  regard 
to  that  question,  but  before  I  gave  any  advice  whatever,  I  wanted  it  dis- 
tinctly understood  that  in  regard  to  the  fees  in  that  case  I  was  to  have 
nothing  whatever  to  do  with  them;  that  they  were  to  go  to  my  successor, 
and  that  I  wanted,  before  I  said  anything,  to  have  it  understood  that  I  did 
it  entirely  disinterestedly  in  regard  to  any  fee.  Of  course  you  can  all  see 
that  1  was  a  little,  perhaps  a  good  deal,  irritated  at  what  I  supposed  had 
occurred,  and  I  did  not  know  the  exact  person  who  had  produced  it.  I 
then  went  on  and  gave  what  I  understood  to  be  the  decisions  affect- 
ing that  question;  that  the  courts  in  New  York  had,  as  I  understood,  in- 
variably held,  whenever  the  question  came  up,  that  the  forfeiture  affected 
the  whole  invoice,  but  that  I  understood  that  Judge  Clifford  had  held  in 
some  case  in  Maine  (I  have  never  seen  this  opinion)  that  the  forfeiture 
might  be  applied  to  the  articles  affected.  Whether  that  was  in  a  charge  to 
a  jury  or  in  a  formal  decision  of  a  case,  or  in  a  written  opinion,  I  had  no 
recollection.  Indeed,  I  had  never  seen  it,  but  I  had*  so  understood.  Then 
a  discussion  arose  on  the  construction  of  the  law. 

Mr.  Dawes. — Who  participated  in  that  discussion  ? 

Mr.  Davis. — The  statute  was  there  and  it  was  read.  Senator  Conkling 
read  the  statute.  He  had  it  in  his  hand  ;  whether  it  was  brought  in  after 
1  came,  or  not,  I  do  not  know\  He  took  the  statute  and  read  it  over,  and 
said  it  did  not  seem  to  him  that  there  could  be  any  doubt  (I  only  give  the 
substance  of  his  remarks,  of  course),  that  the  true  construction  of  the 
statute  was  that  the  whole  of  the  invoice  was  forfeited,  and  that  under 
such  a  state  of  facts  he  thought  it  the  duty  of  the  collector  to  bring  a  suit 
for  the  entire  amount  of  the  invoices,  instead  of  for  the  articles  affected 
with  the  fraud.  1  said  to  him  that  I  thought  that  under  the  rules  of  con- 
struction adopted  in  the  Federal  courts  in  all  revenue  cases,  that  was  the 
construction  which  would  be  put  upon  that  statute.  But  I  said  that  if  the 
question  were  one  purely  at  common  law,  under  common  law  rules,  that 
statutes  imposing  penalties  and  forfeitures  were  to  be  construed  in  the 
milder  sense  {aneliore  sensu).  I  thought  the  highest  court  would  give  the 
construction  that  would  apply  the  forfeiture  to  the  articles  actually  affected, 
but  I  understood  that  the  tendency  of  the  Supreme  Court  was,  as  shown  in 
the  wine  cases,  the  Cliquot  case  and  some  oher  cases,  had  been  to  give  to 
those  statutes  a  rigid  construction  on  grounds  of  public  policy,  and  that  I 
thought  the  Supreme  Court  would  give  the  construction  which  he  gave  to 
the  statute. 

Mr  Dawes. — Carrv  it  out  to  the  conclusion. 


AN  EXTRAORDINARY  HISTORY.  117 

Mr.  Davis. — The  conversation  was  all  of  that  general  character,  and  all 
participating  somewhat  in  it.  I  think  that  the  collector  said  that  he  had 
great  doubt  about  the  propriety  of  directing  a  suit  for  the  forfeited  articles, 
but  thought  that  a  suit  should  be  directed  for  the  entire  invoices.  I  said 
that  that,  of  course,  was  for  him  to  judge  ;  that  the  other  course  had  been 
taken  by  the  collector  since  I  had  been  in  office,  in  some  cases,  and  I 
think  (I  am  not  certain)  that  I  referred  to  a  case  in  which  that  course  had 
been  pursued,  and  where,  as  I  understood,  it  was  pursued  after  some  con- 
sultations with  the  Secretary  of  the  Treasury,  who  happened  to  be  at  the 
collector's  office  in  New  York  when  the  case  came  up.  I  can  state  what 
that  case  was. 

Mr,  Dawes. — No  matter  about  that. 

Mr.  Davis. — I  think  I  made  an  allusion  to  that  case,  but  the  substance  of 
the  conversation  I  have  already  given,  except  that  I  said,  after  this  talk 
occurred,  that  these  gentlemen,  referring  to  the  counsel  of  Messrs  Dodge 
&  Co.,  were  pressing  this  compromise,  and  that,  in  my  judgment,  if  the 
case  went  to  a  trial  no  jury  would  ever  give  a  verdict  for  one  tithe  of  the 
amount  offered,  and  probably  would  not  give  a  verdict  for  anything  ;  and 
1  gave  as  my  reason  for  that,  the  difficulty  of  getting  verdicts  in  that  city — 
which  before  then  existed  more  than  it  docs  now,  1  am  glad  to  say — the 
difficulty  of  getting  verdicts  in  that  city  in  any  case  of  that  kind,  however 
Hagrant.  1  also  stated  that  the  disparity  between  the  actual  loss  to  the 
Government  and  the  amount  claimed  was  so  very  great  that  I  thought  no 
jury  would  believe  that  actual  fraud  existed,  and  that  the  only  expectation 
of  a  verdict  that  could  be  entertained  would  be  that  the  court  should  feel 
it  its  duty  to  direct  a  verdict.' 

Mr.  Dawes. — What  conclusion,  if  any,  was  come  to  while  you  were  there  ? 

Mr.  Davis. — None. 

Mr.  Dawes. — You  left  them  in  consultation  ? 

Mr.  Davis. — I  left  the  gentlemen  whom  I  have  mentioned  all  together. 

Mr.  Dawes. — Do  you  know  whether  a  suit  was  commenced  after  that 
time  ? 

Mr.  Davis. — Only  by  hearsay.  I  know  by  hearsay  and  by  the  statements 
I  have  read.  I  heard  that,  on  the  2d  of  January,  the  letter  came  directing 
Mr.  Bliss  to  comtuence  suit  for  $1,000,000,  and  that  at  the  same  time  a 
check  for  $200,000  was  sent  up  to  him  as  the  amount  to  be  paid  in  compro 
misc.     This  I  do  not  speak  of  as  having  any  personal  knowledge. 

Mr.  Dawes — Did  you  understand  that  the  check  and  the  order  for  the 
suit  came  together  ? 

Mr.  Davis. — I  so  understood,  but  I  do  not  know  it.  I  understood  that 
they  came  in  on  that  day. 


118  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Dawes — When  did  you  first  learn  of  tlie  overvaluation  of  Phelps, 
Dodge  &  Co.? 

Mr.  Davis. — You  mean  of  the  fact  that  the  principle  they  adopted  aided 
to  give  the  Government  larger  duties  ? 

Mr.  Dawes. — Yes. 

Mr.  Davis, — Some  time  afterward,  and  not  long  before!  wrote  that  letter 
to  Mr.  Dodge,  which  has  been  published.  I  think  you  will  find  that  in  that 
letter  I  stated  that  fact. 

Mr.  Dawes. — No  one  of  the  statements  of  Mr.  Jayne,  or  of  any  other  per- 
son resulting  from  his  examination,  communicnted  to  you  that  the  trans- 
action of  Phelps,  Dodge  &  Co.  disclosed  that  fact? 

Mr.  Davis. — I  do  not  know  that  it  was  known  to  Mr.  Jayne  at  that  time. 

Mr  Dawes. — The  inquiry  was,  whether  it  was  communicated  to  you. 

Mr.  Davis. — No,  sir;  it  was  not  communicated  to  me  at  all  by  any  one. 

Mr.  Dawes. — If  they  had  ascertained  that  fact  during  the  examination  of 
tlie  books  and  papers  of  Phelps,  Dodge  &  Co.,  they  made  no  such  commu- 
nication to  you  ? 

Mr.  Davis. — No,  sir. 

iMr.  Dawes. — Would  an  examination  of  the  books  and  papers  of  Phelps, 
Dodge  k  Co.  have  disclosed  that  fact  as  easily  as  the  fact  of  the  under- 
valuation ? 

Mr.  Davis. — I  suppose  they  would  disclose  it,  but  I  suppose  also  that  the 
parties  who  made  the  examination  w^ere  not  looking  for  that.  They  were 
looking  for  other  things.     They  were  looking  for  the  deficiencies. 

Mr.  Roberts. — I  understood  you  in  what  you  said  about  the  Phelps, 
Dodge  case  to  indicate  that  the  propositions  for  settlement  all  came  from 
the  house  of  Phelps,  Dodge  &  Co.,  or  their  representatives? 

Mr.  Davis. — I  said  that  when  I  went  over  to  the  Astor  House  I  was  told 
by  Mr.  Jayne  that  a  proposition  had  been  made  to  pay  a  sum  which,  ac- 
cording to  my  recollection,  was  $150,000.  After  the  conversation  there, 
which  I  narrated,  in  which  I  suggested  as  a  basis  of  settlement  some  prin- 
ciple which  the  collector  might  recommend,  such  as  taking  the  value 
of  the  articles  themselves  that  were  affected  by  the  fraud  (and  which 
was  really  the  basis  carried  out  in  the  ultimate  settlement),  and  after  the 
figures  had  been  made  and  presented  to  the  counsel  for  Phelps,  Dodge  & 
Co.,  the  counsel  retired  and  immediately  returned  and  made  the  offer  to  pay 
that  sum  or  to  pay  a  sum  to  be  ascertained  upon  that  basis.  I  ought  to  say 
however,  that  the  invoices  were  not  all  there.  When  Mr.  Jayne  went 
through  those  that  he  had,  and  reported  the  amrunt,  he  said  that  he  had 
taken  the  items  of  the  invoices  which  were  actuallv  present,  and  that,  as- 
suming that  those  which  were  not  there  would  produce  similar  results 


AN  EXTRAORDINARY  HISTORY.  119 

the  aggregate  result  would  be  about  $200,000;  but  it  was  understood  that 
it  would  be  subsequently  ascertained  accurately  what  was  the  amount  of 
the  items,  and  that  the  $200,000  should  be  increased  or  diminished  as  the 
result  should  turn  out  to  require.  That  was  the  idea  suggested.  The 
$271,000  was,  as  I  understand,  the  subsequent  accurate  ascertainment- of 
that  result.     Of  course,  I  had  nothing  to  do  with  that  ascertainment. 

Mr.  Roberts. — That  increase  was  based  altogether,  as  you  understood,  on 
that  estimate  of  invoices  ? 

Mr.  Davis. — So  I  understood  it. 

Mr.  Roberts. — It  had  no  reference  to  any  increase  demanded  for  pay  for 
counsel  ? 

Mr.  Davis. — Not  to  my  knowledge.  I  understood  that  it  turned  out  that 
the  invoices  which  were  not  present  increased  the  aggregate  from  $360,000 
to  $27  1,000. 

Mr.  Roberts. — At  the  interview  at  the  Custom  House  on  the  3 1st  of  Decem- 
ber, the  officers,  as  I  understand  you,  did  not  approve  of  the  proposition  to 
settle  ? 

Mr.  Davis. — No,  sir;  I  did  not  mean  to  be  so  understood 

Mr.  Roberts. — What  was  the  determination  of  the  officers  in  regard  to 
the  settlement  ? 

Mr.  Davis. — The  consideration  of  tlie  officers,  as  I  understood,  was  on 
the  propriety  of  directing  a  suit  for  the  gross  sum  to  be  closed  up  in 
the  manner  as  had  been  suggested  at  the  Astor  House,  that  is  whether 
to  direct  the  district  attorney  to  sue  for  that  sum  instead  of  suing  for  the 
gross  amount  of  the  invoices,  and  then  have  the  Secretary  of  the  Treasury 
consent  that  that  sum  be  taken. 

Mr.  Roberts. — Do  I  understand  you  that  that  suit  wa^j  to  be  com- 
menced simply  as  a  means  of  settlement,  or  with  a  view  to  actual  prose- 
cution ? 

Mr.  Davis. — Only  as  a  means  for  carrying  out  the  settlement. 

Mr.  Roberts. — That  is  what  I  want  to  get  at,  whether  the  result  of  that 
meeting  was  that  there  should  be  a  settlement,  and  that  the  discussion 
turned  simply  on  the  steps  by  which  that  settlement  should  be  reached. 

Mr.  Davis. — The  result  of  the  meeting  at  tlie  Astor  House  was  that  there 
should  be  a  settlement  on  that  basis,  provided  the  collector  should  direct 
the  suit  to  be  brought  in  the  form  suggested.  That  was  the  result.  It  was 
no  consummated  thing,  because,  of  course,  it  was  understood  that  it  was 
all  within  the  collector's  control,  whether  to  direct  the  suit  in  that  form  or 
in  the  form  in  which  he  did  direct  it. 

Mr,  Roberts. — I  am  speaking  of  the  interview  on  the  31st  of 
December. 


120  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Davis. — There  was  nothing  said  of  the  proceedings  there  (•xcei)t 
suggestions  as  to  the  doubt  of  the  proper  construction  of  the  statute. 

Mr.  Roberts. — What  was  the  determination  of  the  officers  on  the 
31st  of  December  in  regard  to  the  settlement  ?  Did  they  propose  to 
approve  of  the  settlement  on  the  basis  which  had  been  talked  about  ? 

Mr.  Davis. — I  so  understood  it,  and  the  only  question  was  as  to  the 
form  of  instituting  proceedings.  The  settlement  was  to  be  carried  out 
according  to  that  arrangement ;  but  the  form  of  proceeding  was  a  question 
of  doubt  in  the  collector's  mind. 

Mr.  Roberts. — A  good  deal  has  been  said  about  the  influence  employed 
to  bring  about  the  settlement.  State  whether  or  not  you  saw  or  knew  of 
anything  like  terrorism,  further  than  what  might  be  inferred  from  the 
application  of  the  penalties  provided  in  the  law. 

Mr.  Davis. — I  must,  in  all  frankness,  say  that  I  did  not.  I  did  not  under- 
stand anything  of  that  kind.  Nothing  occurred  in  my  presence  in  the 
nature  of  terrorism  or  threats,  and  1  certainly  would  not  have  permitted  it. 
Something  has  been  said  in  this  case  in  reference  to  some  other  matter — 
an  allusion  to  some  private,  personal  matter.  I  never  heard  of  it  at  the 
time,  nor  knew  that  such  a  thing  existed.  If  ther6  was  anything  of  that 
kind  which  had  operation  on  the  proposition  to  settle,  it  was  without  my 
knowledge. 

Mr.  Beck. — I  have  never  fairly  got  to  understand  what  you  meant  bv 
that  meeting  at  the  Astor  House  on  the  night  before  the  31st  December. 
Something  was  agreed  on  there,  before  Mr.  Bliss  met  you  at  your  office,  I 
do  not  think  you  have  yet  stated.  At  the  Astor  House,  what  was  agreed 
upon  there  ? 

Mr.  Davis. — I  am  glad  you  refer  to  it,  because,  on  reflection,  I  find  that  1 
did  not  name  one  gentleman  who  was  there.  I  am  very  anxious  to  be 
distinctly  understood  as  to  what  occurred  there.  I  stated,  and  now  restate 
it,  that  on  that  day  I  was  sent  for  by  a  messenger  from  Mr.  Jayne  request- 
ing me  to  come  to  his  rooms  at  the  Astor  House.  He  lived  in  rooms  there 
with  his  family,  and  had  a  parlor  of  his  own.  I  went  down  there  and 
found  Mr.  Jayne  there,  and  Mr.  Knox,  and  Mr.  Wakeman,  who  were  the 
counsel  for  Phelps,  Dodge  &  Co  Mr.  Jayne  told  me  that  there  had  been  a 
proposition  of  compromise  in  the  Phelps,  Dodge  &  Co.  case,  by  the  pay- 
ment of  $150,000,  but  which,  however,  he  was  not  willing  to  accept,  as  it 
was  not  enough.  He  then  said  to  me  that  they  had  sent  for  me  for  the 
purpose  of  inquiring  as  to  how  the  matter,  if  arranged,  could  be  at  once 
closed  up  without  any  further  proceedings — meaning,  of  course,  without 
the  necessity  of  sending  the  proposition  of  settlement  to  Washington  for 
approval  before  its  acceptance  ;  to  which  1  re})lied  that  the  collector  would 


AX  EXTRAORDIXARY  HISTORY.  121 

probably  not  approve  of  anything?  they  did  unless  it  was  based  upon  some 
principle  which  had  been  adopted  before  as  a  basis  of  action  in  such  cases; 
and  I  then  said  to  them  that,  heretofore,  in  some  cases  the  practice  had 
been  adopted  of  selectinp^  some  invoice  or  invoices  about  equal  to  the  sum 
which  was  offered,  and  directing  a  suit  for  that  amount  to  be  commenced 
by  the  district  attorney,  and  on  his  commencing  »  suit  for  that  amount 
demanding  that  sum,  on  the  party  coming  into  court  and  offering  that 
sum,  in  the  nature  of  a  co^notnV  or  judgment,  judgment  could  be  immedi- 
ately taken  for  that  amount  and  the  matter  disposed  of  without  delay.  Mr. 
Jayne  remarked  that  he  recollected  three  cases  in  which  that  had  been 
done.  The  other  course  was  to  select  from  the  invoices  the  tainted  items, 
if  I  may  so  describe  them,  and  order  suit  for  their  value,  and,  after  the  suit 
was  commenced,  for  the  party  to  appear  and  give  consent  to  a  cognomt. 
These  two  courses  I  suggested  had  been  adopted  on  several  occasions  by 
collectors.  Thereupon  Mr.  Jayne  was  requested  (not  by  me,  but  by  the 
counsel  for  Phelps,  Dodge  k  Co.)  to  ascertain  the  amount  of  those  items 
that  were  alleged  to  be  affected.  He  sat  down  and  figured  up  the  amount. 
I  recollect  now — in  conformity  to  his  recollection  (for  he  told  me  ye.«iter- 
day  that  I  had  fallen  into  a  little  error  there) — that  the  invoices  were 
not  all  present,  but  he  went  through  the  mass  of  invoices  that  were  pre- 
sent. The  other  gentlemen  went  into  another  room,  and  I  sat  there 
looking  through  the  newspapers,  while  Mr.  Jayne  was  examining  the 
figures.  He  went  through  the  papers  that  he  had  there,  and  then  an- 
nounced that  he  had  not  all  of  them  there  ;  but  that  the  result  was, 
estimating  that  those  not  present  would  produce  substantially  the  same 
result  as  those  present,  that  the  aggregate  amount  would  be  $260,000. 

Mr.  Beck. — At  that  interview  was  there  any  one  else  present  except  yon, 
Mv.  Jayne,  Mr.  Knox,  and  Mr.  Wakeman  ? 

Mr.  Davis. — I  was  going  on  to  tell  you  about  that,  and  I  shall  name  a 
gentlemen  who  came  in  subsequently.  Mr.  Jayne  reported  this  sum  to 
me.  I  was  astonished  at  its  magnitude,  and  said  that  Phelps,  Dodge  k  Co. 
would  never  pay  any  such  sum  as  that.  He  replied  that  they  would. 
Then  the  counsel  were  called  for,  and  they  came  in,  and  at  that  time  Mr. 
Fullerton,  a  partner  of  Mr.  Knox,  came  in  also,  saying  that  he  had  just 
got  out  of  court,  which  was  the  reason  he  had  not  been  in  before.  Then 
the  amount  was  given.  Jayne  gave  the  figures.  The  counsel  looked  over 
the  figures  and  retired,  as  I  understood  to  go  to  the  room  where  Mr.  Dodge 
and  Mr.  James  where,  neither  of  whom  I  saw  on  that  occasion.  After  a 
little  they  came  back,  saying  that  they  were  ready  to  pay  the  sums  ascer- 
tained, and  Jayne  said  that  that  was  not  an  absolute  sum,  but  an  ap- 
proximate one,  and  that  if  in  looking  over  the  thing  more  accurately  it 


122  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

should  turn  out  to  be  less,  it  was  understood  that  a  reduction  was  to  be 
made;  and  if  it  turned  out  that  the  items  aggregated  more,  an  increase 
was  to  be  made  in  the  sum.  Then  I  was  requested  to  go  to  my  office,  and 
wait  the  sending  up  of  a  letter  from  the  collector  to  commence  that  suit, 
and  they  went  (Jayne  and,  as  I  understand,  the  counsel  for  Phelps,  Dodge 
&  Co.)  to  the  Custom  Ilouse  to  procure  the  collector's  action  in  the  case. 
I  was  requested  to  wait  at  my  office  for  one  hour,  and  not  to  leav^e  before, 
and  that,  if  they  did  not  get  around  before  that  time,  I  was  asked 
to  take  a  capias  to  my  house,  so  that  they  might  come  there  In  the 
evening. 

Mr.  Beck.— These  were  the  only  persons  you  saw  there  ? 

Mr.  Davis. — The  only  persons  I  saw  except  Mr.  Jayne's  private  secretary, 
who  was  all  the  while  present  in  the  room  or  about  there. 

Mr.  Beck. — They  failed  to  call  on  you  any  more  that  night? 

Mr.  Davis. — The  failed  to  call  upon  me. 

Mr.  Beck. — You  took  the  capias  home  and  no  one  called? 

Mr.  Davis. — No  one  called. 

Mr.  Beck. — Did  you  understand  that  they  had  another  meeting 
that  night,  from  Mr.  Bliss's  remark  that  the}''  were  playing  double  with 
you  ? 

Mr.  Davis. — No;  I  only  understood  from  his  remark  that  some  person 
connected  with  the  Custom  House  had  advised  him  of  the  arrangement 
that  had  been  made,  and  had  suggested  that  if  he  could  tide  it  over  one 
day  the  fee  would  be  his  instead  of  mine.  That  was  the  idea  I  got.  There 
had  been  no  meeting  that  I  had  heard  of. 

Mr.  Beck. — I  did  not  know  but  that  there  was  a  subsequent  meeting 
and  that  instead  of  going  to  your  house  they  had  all  gone  to  the 
collector's. 

Mr.  Davis. — I  had  no  idea  of  that.  They  went,  as  I  supposed,  to  the 
collector's  office,  but  I  do  not  know  that  they  found  him  when  they  got 
there  or  not. 

The  Chairman. — -Is  there  anything  additional  that  you  would  like  to  state 
to  the  Committee  ? 

Mr;  Davis. — Mr.  Dawes  asked  me  to  state  what  other  gentleman  was 
present  in  the  room  in  the  Custom  House  on  the  21st  December.  Now,  I 
have  not  the  slightest  idea,  and  I  have  certainly  no  knowledge,  and  I  have 
not  any  reason,  except  such  as  I  have  laid  before  the  Committee,  to  suppose 
or  toiinfer  that  he  was  in  any  way  concerned  in  that  matter;  and  I  do  not 
wish  to  be  understood  as  conveying  in  any  degree  the  remotest  imputation 
of  the  kind.  I  certainly  want  to  exclude  that  idea  entirely.  I  should  be 
very  sorry,  in  respect  to  any  member  of  either  House,  to  make  a  good  sug- 


AN  EXTRAORDINARY  HISTORY.  123 

j^estion  which  might  be  warped  into  the  idea  that  I  wished  to  convey  that 
impression. 

Mr.  Dawes. — In  putting  the  question  I  had  no  previous  intimation  who 
the  person  was.  I  simply  desired  to 'know  in  what  way  the  statement 
could  be  corroborated. 

Mr.  NiBLACK. — You  have  not  referred  to  the  letters  written  by  you  to  Mr. 
Jayne  ? 

Mr.  Davis. — I  thank  you  for  reminding  me  of  them.  Mr.  Jayne,  it  seems, 
read  to  this  Committee  two  letters  which  I  wrote  to  him,  in  which  allusion 
is  made  to  the  Phelps-Dodge  case.  Of  course,  they  were  private  notes, 
which  he  had  no  business  to  produce  here.  But  I  think  you  will  observe, 
if  you  look  at  them,  that  they  are  simply  an  expression  of  my  opinion  of 
the  charctcr  of  the  proceeding  to  oust  me  of  a  fee,  which,  of  course,  net- 
tled me  a  little.  I  have  been  very  glad,  since  the  facts  have  been  more 
fully  developed  to  me,  that  I  did  not  get  any  fee  in  that  case;  but  at  that 
time  I  did  feel  a  little  nettled  about  the  treatment  I  had  received.  I 
thought  I  was  not  well  treated,  and  speaking  to  Jayne  about  some  other 
matters,  I  threw  out  an  allusion,  which  I  knew  he  would  understand,  to 
those  transactions.  I  said  in  one  letter  that  the  case  of  Phelps,  Dodge  & 
Co.  would  not  have  been  so  badly  botched,  or  something  to  that  effect,  if 
the  arrangement  at  the  Astor  House  had  been  carried  out  as  was  contem- 
])lated.  By  that  I  meant,  of  course,  that  the  desire,  as  I  understood  it,  of 
those  gentlemen  to  have  the  matter  closed  up  without  publicity  or  delay 
could  hav(4been  consummated,  and  would  have  prevented  the  long  contro- 
versy which  afterward  resulted.     I  have  no  other  explanations  to  make. 


COMMENTS   OF  THE   PRESS 


The  following  articles,  copied  from  the  leading  journals  of  the  country,  ex- 
hibit the  drift  and  tone  of  imblic  opinion  during  the  time  that  the  pro- 
ceedings of  the  United  States  revenue  officials,  under  the  "  Moiety  and 
Seizure  Acts,''  icere  under  invesfigalion  before  the  Committee  of  Ways 
and  Means  of  the  House  of  Representatives : 


[Special  Dispatch  to  The  New  Yokk  Times.] 

Wasiiixutox,  March  4,  1874— The  stjite- 
ment  of  Mr.  Jayiie  was  continued  to-day  be- 
fore the  Committee  on  Ways  and  Means. 
It  is  substantially  determined  that  Mr.  "Wm. 
E.  Dodge  shall  be  heard  by  the  Committee  to- 
morrow. Mr.  Jayne  was  instructed  by  the 
Committee,  to-day,  in  the  beginning  of  his 
remarks,  to  make  his  statement  entirely  im- 
personal, and  not  to  enter  upon  specific  state- 
ments of  individual  cases.  Mr.  Jayne's 
stfitements  before  the  Committee,  taken  to- 
gether appear  to  have  created  an  unfavor- 
able impression  agamst  himself  and  the 
moiet}^  system.  He  has  been  ver}-  much  ex- 
cited-in  regard  to  the  njatter,  and  has  been 
witli  great  difficulty  restrained  from  the  use, 
before  the  Committee,  of  the  most  offensive 
and  outrageous  language  toward  prominent 
and  reputable  merchants  of  New  York  City. 


[By  Telegraph  to  The  Tribune.] 

Washixgtox,  March  3,  1874.— Eight  hours 
in  a  sleeping  car  between  New  York  and 
Washington  did  not  have  a  tendency  to 
smooth  the  temper  of  ex-Treasury  Agent 
Jayne,  for  ho  appeared  before  the  Ways 
and  Means  Committee  to-day  in  much  the 
same  state  of  mind  as  ho  showed  yesterday' 
when  ho  was  recounting  the  story  of  his 
wrongs  in  the  office  of  a  New  York  Court. 
In  Ids  previous  statement  before  the  Ways 
and  Moans  ConuTiittec  he  had  spoken  with 
some  warmth  of  the  manner  in  which,  as  he 
alleged,  merchants  had  defrauded  the  Cus- 
toms revenue,  but  to-day  he  lost  all  his  cunning 
when  confronted  with  the  New  York  and 
Boston  Committees  of  merchants  and  business 
men,  and  used  such  language  that  he  would 
have  been  compelled  to  leave  the  committee 


room  had  he  not  retracted  it  in  a  calmer  mo- 
ment.    He  said : 

I  stand  before  a'Ou  accused  of  wrong. 
These  gentlemen  come  and  ask  you  to  listen 
to  charges  given  under  the  impulse  of  public 
opinion ;  and  shall  I  stand  here  accused  while 
ray  wife  to-day  is  broken-hearted  by  tliese 
charges  made  b}^  these  infernal  thieves  and 
their  representative  ? 

Mr.  Wood  and  other  members  of  the  Com- 
mittee said  they  could  not  permit  such  re- 
marks as  those  just  uttered  by  Jayne,  who 
was  required  to  take  his  seat. 

There  were  ten  or  fifteen  gentlemen,  besides 
the  members  of  the  Committee^  present,  but 
the  public  was  excluded  and  reporters  refused 
admitttmce.  The  first  portion  of  the  session 
was  occupied  by  the  Committee  in  a  conver- 
sation as  to  preliminaries  and  the  manner  in 
which  the  investigation  should  be  conducted. 
Mr.  Jayne  finally  appeared,  and  the  business 
of  the  session  was  begun.     It  will  be  remen\- 

I  bered  that  a  fortnight  ago  the  Committee 
held  a  meeting  at  wliich  Jayne  made  a  state- 
ment, showmg  books  and  prctendmg  to  be 
able  to  exhibit  every  case  in  which  he  had 
acted  in  the  most  unfavorable  light  for  the 
merchants.  The  Committee  then  decided  to 
hear  the  merchants'  side  of  the  story,  and 
they  were  accordingly  permitted  to  be  present 
at  the  meeting  to-day. 

The  statement  of  Jayne  at  the  previous 
meeting  Avas  read  lo-da^',  and  he   continued 

I  his    statement.     His    time   to-day   was  prin- 

\  cipally  occupied  in  reading  from  and  denounc- 
ing the  statements  in  Tke  Trihune.  He  spoke 
particularly  of  the  case  of  Ruhis  Story,  of 
New  York,  whom  he  accused  of  defrauding 
the  Government  in  the  importation  of  pei> 
per.     This  was  a  aise  against  whicii  the  ex- 

1  detective  seemed    to    feel   particular  malice, 


AN  EXTKAORDIXAKY  HISTORY 


125 


owing  to  tlie  fact,  probably,  that  a  statement 
of  tlie  dishonest  manner  in  Avhich  Mr.  Story 
Jiad  Ijeen  treated  had  been  printed,  with 
about  tifty  otlier  cases,  in  The  Trihmie.  He 
expressed  a  desire  to  go  over  the  wliole  num- 
l»er  and  '•  expUiin"  them,  but  lie  "vvas  very 
quickly  given  to  understand  that  he  was  not 
summoned  for  the  purpose  of  abusing  news- 
pai>ers,  but  to  fvunish  inforn)ation.  11  is  mind 
was  dwelling  on  wliat  he  calls  the  ai tacks 
made  upon  him,  and  lie  denoimced  the  mer- 
chants in  the  room  as  thieves  and  swindlers, 
and  expressed  his  intention  of  living  long 
enough  to  prove  his  statements. 

There  was  much  excitement  at  the  time, 
and  fears  were  entertained  that  the  ex-agent 
was  losing  his  mind.  He  v  as  in  a  white  heat 
until  called  to  order. 

The  Committees  now  here  are  preparing  a 
list  of  questions  to  be  submitted  to  Jayne, 
the  answering  of  which  will  probably  give 
him  some  annoyance.  Jn  his  hot  blooded 
manner  to-day  he  challenged  the  gentlemen 
present  to  bring  a  case  before  the  Committee 
in  which  he  did  not  act  wholly  within  tlie 
law,  and  justly  to  the  Government  and  the 
individual.  This  challenge  the  Committee 
have  accepted  and  the  first  case  to  be  given 
to  the  Committee  for  consideration  will  be 
that  of  Phelps,  Dodge  &  Co.,  and  a  dozen 
others  are  ready  to  follow.  Mr.  Dodge  will 
himself  take  the  stand,  and  present  liimself 
for  examinati(m  as  soon  as  Jayne  gets  over 
his  anger  enough  for  him  to  listen  with 
l»atii'ncc  to  a  recital  of  official  roblx?rie8. 


[./Vym  Thk  Kew  York  Tribune,  Mai-ch  4, 1874.] 

The  appearance  which  Informer  Jayne 
made  botore  the  Committee  <»f  Ways  and 
Means  of  the  House  of  RepivsentJitives,  on 
Tuesday,  was  the  subject  of  general  com- 
meiit  yesterday  among  merchants  who  are 
watciiing  the  progress  of  the  inquiry  now 
making  into  the  Revenue  laws  with  great 
interest.  There  was  some  gratification  ex- 
pressed at  the  fact  that  Jayne  had  shown 
the  weakness  of  his  auise  by  an  exhibition  of 
bitterness  which  could  hardly  fail  to  have  its 
clTect  upon  the  Committee. 


JAYNE  THE  INFORMER. 

A     I.  K  A  F     FROM     HIS     HISTORY. 

{From  the  Osweoo  Gazette.] 

As  the  name  of  B.  G.  Jayne,  the  infonner, 
has  been  so  conspicuously  brought  forward 
in  connection  with  the  investigation    Ijefore 


the  Ways  and  Means  Committee  of  the 
House  at  Washington,  it  may  be  of  some 
local  interest  to  recall  an  episode  in  his  his- 
tory which  is  well  known  to  politicians  in 
this  Congressional  district.  Jayne  was  born 
in  the  wilds  of  Wayne  County,  Pa.,  and  was 
for  some  time  clerk  in  the  Paymaster's  De- 
partment, in  Washington.  In  1867  he  was 
dismissed  for  defaming  the  character  of  Pay- 
master-General Brice  and  Major  Brooks.  He 
subsexjuently  established  a  photographic  sa- 
loon in  Ithaca,  and  also  had  a  sewing  ma- 
chine agenc}',  and  failed. 

At  the  time  of  the  Republican  Congres- 
sional Convention,  which  was  held  in  tliis 
village  some  eight  or  ten  years  ago,  and  in 
which  Giles  AV.  Hotchkiss,  of  Broome,  and 
William  S.  Lincoln,  fcf  this  county,  were  can- 
didates for  the  Congressional  nomination. 
Jayne  was  one  of  tlie  Tompkins  County 
delegates.  Upon  Jayue's  representati(  n  that 
he  could  control  the  vote  of  the  delegation 
from  his  county  at  will,  Mr.  Lincoln  jilaced  in 
the  hands  of  the  former  am  article  agreeing 
to  pay  him  one  thousand  dollars  in  case  of 
his  (Lincoln's)  nomination.  Mr.  Jayne,  how- 
ever failed  to  handle  his  delegation  as  he  had 
agreed,  and  the  Convention  was  at  a  dead 
lock  for  several  days.  The  dead  lock  was 
finally  broken  by  Informer  Jayne,  in  a  man- 
ner precisely  like  that  employed  about  a  year 
ago  by  York  against  *'  Old  Subsidy  "  Pomoroy 
in  the  Kansas  Legislature.  Jayne,  in  a  man- 
ner whicli  the  virtuous  York  appears  to  have 
successfully  copied,  arose  in  tiie  Convention, 
and,  in  an  ostentatious  manner,  exposed  the 
agreement  l)etwcen  liimself  and  Lincoln, 
whom  he  held  up  to  the  delegates  present  as 
a  monster  of  moral  turpitude,  announcing  at 
the  sjime  time  that  his  support  should  U' 
given  to  Mr.  Hotchkiss. 

The  good  Giles  W.  was  at  once  nominated, 
and  aft?r  his  election  he  rewarded  the  treach- 
erous Jayne — probably  according  to  previous 
agreement — by  securing  liis  appointment  to 
the  position  where,  as  a  spy  and  informer,  he 
has  succeeded  in  securing  both  wealth  and  a 
most  unenviable  repuUition. 


[Cotre^pondence  N.  Y.  Tribune.] 

Washington,  March  5,  1874. — The  devel- 
opments of  to-day  have  swept  away  like 
chaff  the  ingenious,  unfair,  and  dishonest 
statements?  of  ex-Treasury  Agent  Jayne  be- 
fore the  Ways  and  Means  Committee.  His 
hypocrisy,  his  facility  of  expression,  his 
knowledge  of  the  laws  relating  to  moieties,  and 
the  positive  ignorance  of  the  members  of  the 
Committee  as  to  the  manner  in  which  mer- 


126 


CONGRESS  AND  PHELPS,  DODGE  &   CO. 


chants  are  robbed  under  the  guise  of  laws  re- 
hiting  to  seizures,  forfeitures,  &c.,  had  all 
combined  to  give  Mr.  Jayne  a  better  standing 
before  the  Committee  than  he  deserved,  and 
lor  a  time,  at  least,  it  was  api^irent  that  he 
had  made  a  strong  impression  on  their  minds 
tliat  there  was  not  an  honest  merchant  in 
business.  The  tide  now  has  been  so  com- 
l)letcly  turned  that  Mr.  Jayne  has  not  a  friend 
upon  the  Committee. 

The  clear,  compact,  simple  statement  of 
Mr.  Dodge  to-da3%  and  the  remarks  of  Mr. 
Hyde  at  the  meeting  of  the  Committee  this 
evening,  have  placed  before  the  members  a 
lecture  of  the  disgraceful  sj'stem  now  prac- 
ticed, so  plam  in  every  feature  that  it  cannot 
bo  misunderstood.  The  system  was  shown 
to  be  so  monstrous  in  its  character  and  ex- 
tent that  it  extends  into  Legislative  halls,  to 
the  judicial  bench,  and  almost  to  the  very  feet 
of  the'  ver /  highest  in  the  land. 

Mr.  Dodge  showed  that  his  firm  had  been 
in  business  for  forty  years,  and  that  during  that 
time  they  had  paid  the  Government  in  duties 
alone  $r)(>,000,000,  and  that  never  before  had 
they  been  charged  with  fraud  or  had  any 
trouble.  The  amount  of  duties  due  when  Mr. 
Jayne  began  was  confessedly  only  $1  GOO, 
and  the  total  importation  on  which  the  al- 
leged undervaluation  occurred  was  only  $6,- 
G58.  He  also  showed  that  during  one  year 
the  lirm  had  added  to  the  cost  of  goods  be- 
tween $200,000  and  $300,000,  and  paid  duty 
on  tliern  at  t'.ie  increased  rate  of  25  per  cent. 
Dunng  a  period  of  five  years  the  lirm  had 
done  a  business  of  $40,000,000.  The  firm,  as 
he  could  show,  had  on  frequent  occasions,  by 
accident,  received  goods  at  an  overvaluation. 
Mr.  Dodge  described  the  manner  in  which  he 
was  informed  of  his  alleged  frauds  in  Jay  no's 
den.  Jayne,  James  and  Noah  Davis  were 
present.  From  that  time  the  game  of  intimi- 
dation began,  and  on  every  opportunity  Mr. 
Phelps  was  reminded  of  the  number  of  years 
the  members  of  the  firm  could  be  sent  to 
prison,  how  much  they  could  be  fined,  and 
how  much  they  could  bo  made  to  forfeit. 
This  game  was  not  confined  to  Jayne  and  the 
small  players,  but  the  names  of  Congressmen, 
Judges,  Senators,  Secretaries  and  the  highest 
powers  in  the  country  were  used  to  drive  the 
firm  to  a  settlement.  Gen.  Butler  was  so 
much  concerned  that  he  himself  played  the 
part  of  threatenor.  lie  told  Mr.  I)odge  that 
there  was  one  letter  which  would  convict  the 
firm  before  any  court  in  the  Union.  Kven  the 
fair  name  of  fcjenator  Conkling  was  not  un- 
lieard  during  the  efforts  to  enforce  a  settle- 
ment. 

There  were  man}-  considerations  which  in- 


duced the  firm  to  settle.  In  the  first  place, 
the  official  power  thrown  against  them  was 
frightful  in  its  extent,  and  could  scarcely  bo 
resisted.  It  was  evident  that  a  conviction 
would  be  forced,  and  the  payment,  or  even  a 
decree  against  tliem  of  $1,700,000,  would  se- 
riously impair  their  credit  at  homo  and 
abroad ;  and  further,  it  was  known  to  them 
and  to  all  that  Secretary  Boutwell  was  about 
to  go  out  of  office,  and  knowing  Gen.  Butler's 
power  and  his  interest  in  the  case,  it  was  not 
improbable  that  he  might  intluence  the  suc- 
cession. Mr.  Dodge  said  there  were  six  or 
eight  leading  men  in  the  country,  among  them 
several  members  of  Congress,  who  were 
strangely  interested  in  the  case.  He  would 
have  given  the  names  of  the  members  of  Con- 
gress had  the  Committee  asked  them,  but  the 
Committee  thought  it  would  make  the  inves- 
tigation rather  too  pungent. 

The  argument  of  Mr.  Hyde  is  described  as 
being  one  of  the  most  powerful  and  startling 
ever  made  before  a  Committee.  He  said, 
among  other  things,  that  he  could  state  from 
his  experience  wliile  United  States  Attorney, 
and  from  his  thorough  acquaintance  with  the 
subject,  that  no  merchant  having  due  regard 
to  his  character  and  capital  would  venture  to 
continue  the  business  of  an  importer  under 
the  present  law  and  its  practical  adminis- 
tration ;  and  that  the  terror  of  merchants  had 
been  greatly  inci'eased  within  a  very  recent 
date  by  a  knowledge  of  the  fact  that  the  lead- 
ing representative  of  the  Administration  in 
tlie  House  of  Representatives  and  one  of  the 
controlling  men  in  the  counsels  of  the  nation 
was  the  man  to  whom  special  agents  and  in- 
formers resorted  for  legal  information."  and 
who  was  their  paid  attorney  and  a  heavy  par- 
ticipant in  most  of  the  compromises  recently 
I  effected.  This  was  said  in  a  manner  which 
I  carried  conviction,  and  the  portrait  was  re- 
cognized as  that  of  Gen.  Butler.  Mr.  Hyde 
said  he  knew  the  facts  he  charged. 

It  was  after  10  o'clock  to-night  when  the 

Committee  closed    its    session,    and   another 

meeting  is  called  for  to-morrow.     Just  before 

the  adjournment  was  made  Mr.  Jayne  gave  in- 

dications  of  "  hedging,''  for  he  could  not  help 

j  seeing  how  the  tide  was  turnuig  against  him. 

i  He  told  Mr.   Hyde  that  had  he  known  that 

j  there  had  been  any  overpayment  on  the  part 

I  of  Phelps,  Dodge  &  Co.,  he   would  have  ob- 

j  taincd  their  release.     He  did  not  know  there 

j  had  been  more  overvaluations  than  undervalua- 

I  tions,  or  he  would  not  have  proceeded  against 

'  them.     It  is  evident  that  the  entire  Committee, 

I  without  a  single  exception,  are  on  the  side  of 

the  merchants,     Their  whole  proceeding  and 

1  conversation    showed  it,  and   some  of  them 


AN  EXTRAORDINARY  HISTORY. 


12' 


have  even  gone  so  far  in  private  conversation 
as  to  deuoinice  Jayne  as  a  rogue. 


[FVom  the  New  York  Star,  March  7,  1874.] 

The  story  told  by  the  Hon.  AVilliani  K. 
Dodge  would  make  the  brazen  image  in 
"Aida"  bhisli  with  shame,  liad  the  scene  of 
his  sorry  tale  been  Egypt  rather  than  Ame- 
rica. If  ever  '•  honorable "  rnen  wore  en- 
gaged in  a  conspiracy  to  rob  and  destroy  the 
merchants  of  a  country,  the  gang  that  mulct- 
ed Phelps,  Dodge  &  Co.  of  nearly  S:{00,000 
are  they.  The  statements  made  at  the  time, 
coupled  with  the  apparent  hastt*  and  secrecy 
with  which  Phelps,  Dodge  k  Co.  paid  their 
compromise  fine,  deceived  the  entire  com- 
munity, and  the  unfavorable  comments  of  the 
press,  to  which  Mr,  Dodge  alluded  in  liis  ex- 
planation before  the  Congressional  Conmiittee, 
were  Vx)rn  of  that  history  rather  than  of 
malice  or  lack  of  charity.  Mr.  Dodge's  word 
will  be  believed  in  this  matter.  His  report 
gives  undoubtedly  precisely  what  occurred, 
and  Congress  should  compel  the  guilty  officials 
who  became  rich  at  the  expense  of  that  firm 
to  disgorge  and  refund  every  dollar  over  and 
above  the  $1,600  said  to  be  justly  due  the 
Government, 


[/'rom /Ac  Boston  Port,  March  6,  1874.] 

It  is  with  shame  as  well  as  indignation  that 
one  reads  the  statement  of  Mr.  Wm.  E.  Dodge 
before  the  Ways  and  Means  Committee.  That 
a  merchant  who  lias  been  in  honorable  busi- 
ness forty  years,  paying  more  than  $50,000,- 
000  in  duties  to  tJio  Government  during  that 
time,  should  be  subject  to  defamation  and 
])lMnder  by  such  an  official  as  Jayne,  is  a 
luimiliating  commentary  on  the  l)oasted  justice 
of  our  laws.  The  story  of  the  great  seizure 
of  which  Mr,  Dodge's  house  was  the  victim, 
sets  forth  the  chief  features  of  the  abominable 
moiety  system  in  the  worst  light.  There  are 
the  tampering  with  confidential  clerks,  the 
manufacture  of  false  evidence,  the  threats  of 
imprisonment,  and  finally  the  compromise  on 
payment  of  $271,000,  all  employed,  not  for 
the  execution  of  tlie  laws  or  the  protection  of 
the  Oovornjiient,  but  for  the  annoyance  of 
merchants  and  the  gain  of  spies.  In  importa- 
tions of  $40,0<i0,000  worth,  covering  a  period 
of  five  years,  the  technical  errors  for  which 
Mr.  Dodge  paid  so  enormously,  amounted  to 
only  $1,GG4  due  the  Government.  It  is  in- 
credible that  for  so  slight  an  irregularity,  in- 
nocently caused,  so  great  and  grave  a  wrong 
could  be  perpetrated  in  the  name  of  the 
United  States.  General  Butler  appears  in  this 


notorious  business  as  counsel  for  infonner 
Jayne.  His  part  was  characteristic.  It  con- 
sisted, as  Mr.  Dodge  states,  of  threatening  the 
merchants  with  letters  surreptitiously  ob- 
tiiined,  and  aiding  to  bring  about  the  lucrative 
compromise.  The  association  of  Butler  with 
each  of  the  secret  transactions  now  coming 
to  light  serves  to  keep  Jiiiu  and  his  services 
constantly  before  the  mercantile  public  whoso 
advice  and  cooperation  he  so  recently  solicit- 
ed on  the  subject  of  the  Geneva  award  and 
the  currency  distribution. 


[From  the  N.  Y,  Eveniko  Post,  Merck  6,  1874.  J 

The  present  management  of  political  affairs 
received  yesterday  a  terrible  blow  in  the  pro- 
ceedings Ixjlbre  tlie  Committee  oi"  "Ways  and 
Means  at  Washington.  The  appearance  of 
Mr.  Dodge,  the  head  of  the  house  of  Phelps. 
Dodge  &  Co.,  of  this  city,  and  tJie  character 
of  the  testimony  lie  bore  are  facts  significant 
enough  to  be  of  national  iinjMirtunce,  and  the 
infiuence  which  they  will  exercise  upon  tlie 
minds  of  all  honest  and  thinking  men  can 
hardly  Ije  overestimated. 

We  are  not  in  the  slightest  degree  biased 
by  any  private  estimate  of  our  own  of  the 
chanicter  and  i>osition  of  Mr.  Dodge,  but  look 
upon  him  here  simply  as  a  reprcsentativL- 
man.  He  ^las,  in  the  first  place,  a  national 
reput«ti<m  in  a  threefold  capacity — as  a  mer- 
chant, as  a  politician  and  as  one  warmly  in- 
terested and  active  in  the  advancement  of  re- 
ligion and  montls.  His  sincerity  and  honest 
zeal  in  the  church  and  all  that  he  believes 
legitimately  belongs  to  it  has  never  been 
(juestioned;  as  a  merchant,  liis  reputation,  ex- 
tending far  lieyond  his  own  country,  has  for 
half  a  century  Ijeen  without  a  blemish ;  and 
his  integrity  as  a  politician,  both  in  and  out  of 
office,  has  never  been  impeached.  His  country 
is  the  better  for  the  life  of  such  a  man,  not 
merely  as  an  honoraltle  and  patriotic  citizen, 
but  as  a  merchant  wliose  business  has  con- 
tributed enormously  to  its  material  prosperity  ; 
and  the  Republican  party,  of  whichever  sinci' 
it  Jiad  an  existence  he  has  been  an  active 
member,  has  been  the  more  respectable  for 
his  attachment  to  it,  and  lias  received  in  its 
national  and  its  local  action  tlie  most  generous 
pecimiary  support  where  such  sujiport  was 
!  legitimate. 

When  a  man  of  such  relations  and  weight 
of  character,  one  so  universally  known  and 
i  esteemed^  appears  before  the  national  legisla- 
I  ture.  through  its  committee,  and  impeaches 
!  the  administration  of  the  laws  of  his  country, 
I  it  is  a  fact  of  immense  significance.  The  facts 
presented  by  him  are  not,  it  is  true,  now  for 


128 


CONGRESS  AND  PHELPS,  DOD»E  &  CO. 


the  first  time  made  public.  They  were  set 
forth  at  length  in  the  columns  of  this  journal 
agaiu  and  again  at  the  time  they  transpired. 
Necessarily,  however,  our  view  of  the  case 
was  confined  to  our  own  readers,  while  now 
Mr.  Dodge's  repetition  of  the  facts  and  the 
arguments  deducible  therefrom,  is  spoken  to 
the  whole  countiy  with  all  the  solemnity  that 
ottieial  investigation  can  give  it,  and  all  the 
force  that  comes  from  personal  responsibility. 
The  people  will  now  understand,  on  testimony 
tliat  is  neither  impeached  or  impeachable, 
that  a  robbery  under  cover  and  terror  of  the 
law,  as  we  long  ago  showed,  was  committed 
by  the  officers  of  the  government  upon  this 
one  house  to  the  amount  of  a  quarter  of  a 
million  of  dollars,  and  that  this  method  of 
tlic  administration  of  the  laws  is  not  the 
exception  but  the  rule. 

In  China  the  successful  merchant  dreads  to 
have  it  known  that  he  is  so.  He  shrinks 
with  the  utmost  caution  from  any  display  of 
wealth,  for  to  be  known  tP  be  more  than 
ordinarily  prosperous  is  only,  he  knows  to 
ex[Ktse  him  to  the  cupidity  of  a  set  of  bandits 
nrnied  with  official  power.  He  becomes  the 
subject  of  a  ''  squeeze " — as  the  process  is 
signilicantly  called — of  successive  "  squeezes,'' 
so  long  as  it  is  tho\ight  that  the  pressure  will 
yield  returns.  It  is  precisely  to  a  despotism 
of  this  sort  that  the  administration  of  the 
laws  of  our  country  has  been  reduced.  Our 
whole  commercial  community,  indeed  every 
member  of  the  community  who  has  any  means 
to  be  taxed  for  the  support  of  the  State,  is 
subjected  to  a  despotic  terrorism  from  men  in 
office,  against  which  there  is  no  defence  and 
from  which  there  is  no  appeal. 

It  is  perfectly  safe  to  say  that  never  before 
in  our  history,  never  under  any  part}',  has 
tJiere  been  any  such  unscrupulous  and  op- 
pressive use  of  power.  Such  a  statement  as 
that  of  Mr  Dodge  cannot  be  without  results. 
It  is  made  to  the  whole  nation,  in  unquestion- 
able terms,  on  authority  that  cannot  be  gain- 
said: and  the  question,  we  believe,  which  the 
people  will  ask  themselves  will  be :  Which 
is  it  that  must  come  to  an  end,  this  official 
despotism,  or  all  hope  of  a  just  government. 


\From  The  New  Yokk  Evening  Mail,  March  6, 
1874.] 

Mr.  Dodge's  statement  before  the  Congres- 
sional Investigating  Committee  is  a  straight- 
forward, manly,  and  ingenious  narration  of 
facts  which  will  irni)ress  the  country  favora- 
bly, and  confirm  the  general  confidence  in  the 
uprightness  of  one  of  our  greatest  mercantile 
houses.     No  civilized  countrv  will  tolerate  on 


its  statute  books  the  enormity  of  imposing 
life  imprisonment  for  a  mere  assault  and 
battery  or  trespass,  yet  it  would  be  about  as 
reasonable  as  to  expose  a  great  mercantile 
house  to  such  penalties  as  Phelps,  Dodge  t^^ 
Co.  became  liable  to  pay  for  undervaluations 
of  a  few  thousand  dollars  in  entries  of  several 
millions. 


[From  The  New  York  Tribune,  March  6,  1874  ] 

The  statement  of  Mr.  W.  E.  Dodge  before 
the  Ways  and  !Means  Committee  yesterday 
is  an  effectual  extinguisher  to  the  word}'  har- 
rangues  of  Jayne.  Jt  is  too  late  to  say  a  word 
as  to  the  standing  of  the  eminent  merchant 
who  has  been  obliged  to  defend  an  old  firm 
against  a  disreputable  spy.  The  contrast 
between  the  two  men  is  so  marked  that  we 
are  not  surprised  to  learn  that  the  airy  super- 
structure which  Jayne  raised  before  the  Com- 
mittee has  toppled  over.  The  vindication  of 
the  firm  of  Phelps,  Dodge,  &  Co.,  ample  as  it 
is,  may  be  taken  as  a  complete  and  impreg- 
nable argument  against  the  whole  detestable 
moietv  svstem. 


[From  The  New  York  Times,  March  G,  1874.] 

The  Committee  on  Ways  and  Means  con- 
tinued in  session  many  hours  to-day.  hearing 
the  merchants  of  Boston  and  New  York  in 
regard  to  the  modification  of  the  Customs 
laws.  The  stjitement  of  Mr.  Dodge  before 
the  Committee  obtains  entire  credence,  and 
the  manner  in  which  the  firm  was  dealt  with 
has  been  denounced  by  members  of  the  com- 
mittee in  very  vigorous  terms.  So  far  as  this 
feeling  of  indignation  assumes  a  personal 
direction  among  members  it  extends  towards 
Gen.  Butler  for  the  part  he  took  in  the  trans- 
action as  Jayne's  counsel.  Butler's  influence 
with  the  House  has  been  greatly  damaged  by 
the  statement  of  liis  connection  with  this 
affair,  and  he  will  scarcely  liave  the  hardi- 
hood to  attempt  to  lead  the  House  again  till 
the  storm  has  had  time  to  blow  over.  One 
phase  of  the  newspaper  discussion  of  tlie 
moiety  question  is  commented  on  quite  exten- 
sively here  to-day,  and  tliat  is  the  ivttitnde  of 
two  daily  papers  in  New  York,  which,  in 
order  to  serve  partisan  ends,  denounced  the 
firm  of  Phelps,  Dodge  &  Co.  as  great  swind- 
lers of  the  Government  in  1872,  and  which 
now,  in  order  to  damage  tlic  reputation  of  the 
Government  officers,  restore  the  firm  to  their 
original  character  of  Christian  merchants  and 
gentlemen. 


AN  EXTRAORDINARY  HISTORY. 


129 


I  W(Hihiiigton   Coi  resjwudencf.    N.  Y.  Tuibune, 
March  10,  18r4.J 

This  lias  been  a  bad  clay  for  Detective 
.fayne  and  liis  attorney.  AVhilc  the  hitter 
was  being  roasted  by  Mr.  Foster  in  the 
J  louse,  on  the  Sanborn  business,  tlie  former 
was  cogitating  on  means  whereby  he  miglit 
<'scape  some  ol  the  disgrace  which  liung  over 
liini  in  tlie  Ways  and  Means  Committee.  To- 
nights  session  of  tlio  Conunittee  has  done  the 
work  lor  the  detective.  The  two  worthies, 
tiie  rogue  and  liis  eoim.sel,  can  keep  each 
other  company  in  their  ruin,  and  join  llieir 
lamenfeitions  on  the  uncertainty  of  sinful 
ways. 

If  there  existed  in  the  minds  of  the  mem- 
bers of  the  Ways  and  Means  Committee  any 
doubt  of  the  copartnership  bi-tween  Jayne  and 
Butler,  it  was  disijelied  to-niglit  In'  testimony 
which,  while  not  of  the  l>est,  may  neverthe- 
less be  taken  in  this  case  as  wholly  couviu- 
cing.  With  Butler  as  the  attorney  ol"  8anlx)rn, 
and  also  the  attorney  and  adviser  of  Jayne, 
and  with  the  trouble  that  has  overuiken'  the 
three,  the  information  given  to-day  liy  Secre- 
tary Richardson,  on  the  Hoor  of  the  House, 
thai  he  has  suspended  the  payment  of  moie- 
ties to  inlbrraers  in  cases  luider  both  the  San- 
l)orn  contracts  and  the  Custom  House  seizures, 
will  bo  received  by  the  combination  of  plun- 
derers with  feelings  not  easy  to  l)c  described. 
The  attorney  may  yet  show  some  hesitation 
to  relinquish  two  clients  who  promised  such 
heavy  tribute  to  his  avarice,  but  publicity  has 
gone  to  such  an  extent  tliat  even  Butler,  with 
all  his  audacity  and  dan,  cannot  hope  to  hold 
the  questionable  i)lace  ho  has  so  long  tilled 
in  the  party  and  in  the  House  of  Representa- 
tives. 

The  developments  before  the  Ways  and 
.Means  Conmiitteo  this  evening  were  simply 
crushing,  and  Mr.  Jayne  was  left  without  a 
prop  to  sustain  his  despicable  proceedings 
and  oppressions ;  and  when  he  linished  his 
cross-exanunation  he  looked  as  though  he  had 
passed  through  a  most  trying  and  exhaustive 
ordeal.  He  came  on  the  stand  to-day  much 
chastened  in  appearance,  and  not  only  the 
New  York  and  Boston  gentlemen  who  were 
present,  but  the  members  of  the  Committee, 
remarked  that  lie  was  greatly  altered  in  his 
manner,  having  lost  much  of  his  effrontery 
and  impertinence.  It  will  be  remembered 
that  when  he  lirst  appaired  here  he  announced 
with  a  great  Hour^sll  that  the  mercliants 
1)1  New  Vork  were  a  set  of  thieves,  and  he 
would  brand  them  before  the  Committee; 
that  he  would  prove  it  from  books,  so  clear  as 
not  lobe  doubted;  and  he  talked  loud  and  got 
red  in  the  face  at  the  verv  idea  that  the  mer- 


chants would  come  here  to  defend  them- 
selves. His  next  step  was  to  play  the  patriotic 
and  humility  dodge.  He  told  how  much  he 
loved  his  country  and  how  much  he  had  done 
for  her;  that  he  had  done  no  more  than  the 
law  recognized ;  that  ho  had  worked  so  hard 
in  the  service  of  his  country  that  he  had 
broken  down  in  health ;  and  he  even  went  so 
far  as  to  allude  to  his  heart  broken  wife.  His 
last  step  was  to  acknowledge  his  misdeeds 
and  turn  State's  evidence. 

To-day  he  was  heard  for  some  time  and  set 
up  a  general  denial  on  most  of  the  charges. 
He  denied  having  known  that  Phelps,  Dodge 
k  Co.  had  ever  imjjorted  poods  at   an  over 
valuation,  but  Mr.  Hyde  will  go  on  the  sUtnd 
to-morrow  and  testify  that  Jayne  admitted  lo 
I  him  that  he  (Jayne)  had  knowledge  of  the 
I  fact,    and    Mr.    Dodge    will    show   from    his 
j  books,  so  long  in  the  possession  of  Jayne. 
I  that  there  were  entries  showing  it.  and  that 
j  in  importations  the  over  valuations  were  stated 
I  in   the   invoices  which  passed   through   the 
custom  houses. 
j      While  the  merchants  here  were  reasonably 
satisfied  that  Gen,  Butfer  had  been  the  couii- 
I  sel  of  Jayne,  and  was  otherwise  mixed  up  in 
I  the  Jayne  conspiracy,  they  were  nevertheless 
j  unwilling  to  make  the  charge  direct  without 
i  explicit  proof.     To-night  Jayne  admitted  that 
I  he  had  engaged  Butler  as  liis  counsel  in  the 
j  I'lielps  &  Dodge  case,  and  that  he  had  con- 
sulted and  paid  him  in  several  other  cases. 
He  did  not  say  that  he  had  paid  Butler  in 
any  cases  wherein  no  service  was  rendered. 

Several  merchants  have  written  here  to 
know  if  the  resignation  of  Jayne  had  been 
accepted,  as  reported.  The  SecreUiry  of  the 
Treasury  says  that  it  was  at  once  accepted 
upon  receipt,  and  the  fact  is  certtiinly  entered 
on  the  records.  It  may  bo  stated,  however 
that  Frank  F.  Howe,  also  a  Special  Agent  of 
the  Jayne  description,  but  less  oppressive,  is 
still  in  office  and  will  probably  give  the  mer- 
chants as  much  trouble  as  they  can  enduie 
unless  the  law  is  rei)ealed.  Butler's  adher- 
ents give  out  to-night  that  he  intends  to  make 
a  fearful  onslaught  on  the  merchants  and  im- 
[Kjrters  of  New  York  and  Boston,  particularly 
on  Phelps,  Dodge  &  Co.  His  motive  for  at- 
tacking merchants  in  both  cities  is  apparent — 
in  Boston  they  opposed  Simmons  and  in  New- 
York  they  oppose  Jayne,  both  his  favorites. 


{From  the  New  York  Herald,  March  13,  1874  ] 

In  Magna  Charta  it  is  provided  that  "  no 
freeman  shall  be  fined  save  in  proportion  to 
his  fault,  nor  shall  any  tine  be  levied  on  him 
to   his  utter  ruin."     It  seems  a  remarkable 


130 


CONGRESS  AND  PHELPS,  DODGE  &   CO. 


fact  that  one  of  the  very  wrongs  that  afflicted 
society  in  the  days  of  the  bad  King  John 
should  arise  to  plague  ua  in  this  model  Re- 
public, where  the  rights  and  interests  of  the 
people  are  supposed  to  prevail  over  all  other 
rights  and  interests.  Did  the  minions  of  the 
bad  King  ever  do  worse  than  the  minions  of 
our  republican  Treasury,  which  tines  a  man 
two  hundred  and  seventy-one  thousand  dol- 
lars in  a  case  in  which  Uie  Government  lost 
a  little  over  one  thousand  dollars  ?  All  that 
can  be  said  in  favor  of  the  oppressive  laws 
was  said  yesterday  b}'  Mr.  Bliss,  and  was 
very  little,  as  will  be  seen  by  the  report  in 
our  Washington  letter. 


[  Washington  Cmresjxntdence  N.  Y.  World,  March 
16,  1874.] 

Great  was  the  curiosity  and  certainly  not 
less  groat  the  anxiety  to  see  the  terrible  Jayne 
once  more  on  the  stand,  this  time  for  the  pur- 
pose of  answering  the  merchants  and  their 
counsel,  and  for  cross-examination.  To  the 
surprise  of  all.  Jayne's  whole  bearing  had 
undergone  a  change,  and  he  has  good  humor- 
edly  been  accused  of  selling  out  to  the  mer- 
chants. No  longer  attacking  even  Phelps, 
Dodge  &  Co.,  he  merely  cited  some  dirty  case 
of  pure  smuggling  in  corsets,  where  he  caught 
a  man  and  made  him  pay  $26,000.  He  ad- 
mitted even  that  the  law  of  1 863  was  in  some 
respects  too  severe.  And  then  came  the  ter- 
rible announcement,  made  of  his  own  ac- 
cord and  not  elicited  by  cross-examination, 
that  frauds  in  the  Custom  House  would  be  al- 
most a  myth  if  the  otticials  were  not  in  collu- 
sion. Amidst  breathless  silence  he  asserted 
that  out  of  sixty-one  cases  he  found  fifty- 
three  where  custom  otficials  had  been  in 
direct  collusion  with  fraudulent  merchants. 
But  when  he  further  asserted  that  he  had  re- 
ported these  delinquents  to  the  Secretary,  and 
only  a  portion  of  ihem  had  been  dismissed, 
while  the  major  part  of  them  are  still  in  their 
old  places,  a  thrill  of  indignation  ran  through 
the  Committee,  and  Mr.  Beck — his  Scotch 
blood  mounting  to  his  very  forehead — asked 
the  detective  whether,  under  these  circum- 
stances, the  whole  seizures  were  not  a  con- 
spiracy ?  The  undaunted  Jayne  immediately 
answered :  "  As  long  as  thieves  remained 
in  the  Custom  House  the  seizures  of  books, 
&c.,  was  simply  highway  robbery,  and  there- 
fore," said  he,   "  1  quit." 

General  Butler  has  openly  declared  that  he 
advised  Jayne  to  report  these  men,  and  that 
the  blame  for  the  connivance  must  be  borne 


by  those  who  were  at  the  time  responsible. 
"  This,"  said  the  intrepid  Butler,  *'  is  not 
mine  nor  Jayne's  funeral."  And  it  is 
shrewdly  surmised  here  that  Jayne  made  his 
adniissions  respecting  the  list  of  the  tainted, 
and  retained  the  list  of  the  implicated  by  the 
advice  of  Butler,  who  paid  Boutwell  the  first 
instalment  of  what  he  promised  him,  this  day 
two  weeks,  for  not  sticking  to  his  bargain 
in  contirming  Simmons. 

Jayne,  cross-examined  by  Mr.  Beck,  ad- 
mitted that  in  order  to  get  information  the 
Government  agent  is  obliged  to  deal  with 
thieves  and  to  receive  stolen  goods — the 
papers  brought  to  him  by  the  several  clerks 
having  in vwriably  been  stolen  from  their  em- 
ployers. 

It  IS  admitted  liere  that  the  absence  of  the 
Collector,  Naval  Otficer  and  Surve\-or  was 
very  judicious.  As  they  were  interested  in 
moieties  they  could  not  with  any  good  grace 
defend  the  system  that  has  so  long  existed, 
nor  are  they  willing  to  condemn  it. 

Attorney  Bliss  had  no  such  qualms.  The 
defender  of  the  Sanborn  scandal  appeared  be- 
fore the  Committee  in  all  the  glory  of  his 
shrewdness  and  impudence. 


iFrom  the  N.  Y.  IxDErENDENX,  March  12, 1874.] 

The  exhibit  made  before  the  House  Com- 
mittee of  Ways  and  Means  b3-  the  merchants 
of  New  York  and  Boston — particuhirly  by 
Mr.  Dodge,  the  senior  member  of  the  well 
known  lirm  of  Phelps,  Dodge  &  Co. — in  re- 
gard to  the  outrages  which  have  been  perpe- 
trated upon  importers  by  Custon)  House  offi- 
cials, presents  a  picture  of  facts  and  processes 
of  oppression  and  terrorism,  under  the  cover 
of  law,  that  is  really  astounding.  The  cfise 
of  Phelps,  Dodge  &  Co.  is  a  striking  example 
of  these  outratjes.  This  firm,  on  the  trumped 
up  charge  of  intending  to  evade  the  revenue 
laws  and  defraud  the  Government,  for  which 
there  was  no  just  foimdation,  was  virtually 
robbed  of  $271,000,  besides  Jiaving  its  char- 
acter for  business  integrity  put  in  peril  before 
the  community.  The  way  in  which  the 
thing  was  done  Mr.  Dodge  details  in  his  tes- 
timony before  the  Committee.  There  was,  by 
pure  accident,  without  any  false  invoices  or 
intention  to  cheat  the  Government  out  of  a 
dollar,  an  under  valuation  of  $6,658,  on 
which  duties  were  not  paid,  and  the  amount 
due  the  Government  was  $1,658.  Noah 
Davis,  then  District  Attorney  of  the  United 
States,  now  one  of  the  Judges  of  the  Supreme 
Court  of  this  State,  in  a  letter  addressed  to 


AX  EXTRAORDINARY  HISTORY. 


131 


the  firm,  declares  that,  after  having  officially 
investigated  the  case,  ho  was  fully  satisfied 
that,  although  there  was  a  technical  violation 
of  the  law,  there  was  no  evidence  of  fraud- 
ulent intention,  which  really  constitutes  the 
offence  the  law  itself  defines  and  means  to 
punish.  And  yet  the  Custom  House  officials 
claimed  a  penal  forfeiture  to  the  amount  oi 
$1,750,000,  and  finally  compromised  this 
claim  by  receiving  $271,000 — one  half  of 
which  went  into  their  own  pockets  under  the 
infamous  moiety  system.  We  said  »i  the 
time  that  the  firm  ought  not  pay  a  cent,  and 
Mr.  Dodge  now  says  in  his  testimony  that 
•'  they  were  fools  for  paying  the  money." 
His  explanation  of  the  admitted  folly  is  that 
they  were  driven  to  it,  as  the  least  of  two 
evils,  by  a  system  of  terrorism,  in  which  the 
bland  and  gentle  ex-Trea.sury  Agent.  Jayne, 
who  retires  from  the  service  enriched  by 
about  $400,000  as  his  share  of  the  spoils, 
acted  a  conspicuous  part.  As  the  facts  are 
now  develojjed  the  Government  has  but  one 
course  to  pursue  in  consistency  with  moral 
honesty ;  and  this  is  to  pay  back  to  the  firm 
every  dollar  of  this  money,  less  the  amoimt 
of  unpaid  duties,  with  interest  at  seven  per 
cent,  from  the  date  of  its  receipt.  The  coerced 
payment  was  a  wanton  robbery,  and  the 
Government  has  no  more  right  to  be  a  rob- 
ber tlian  William  M.  Tweed. 


THE  CASE  OF  MR.  DODGK. 


[From  Uie  N.  Y.  Tribune,  March  14,  1.-74.J 

That  was  a  pathetic  remark  which  Mr. 
William  E.  Dodge  addressed  to  the  Conunittoc 
of  Ways  and  Means  at  the  end  of  his  story. 
"  Having  teen  a  merchant  fifty  years,"  said 
lie,  "  I  desired  to  die  in  peace;  and  when  I 
paid  this  money,  1  wanted  that  to  Ije  the 
end  of  it.  But  it  is  paraded  from  Dan  to 
Beersheba  now,  because  other  people  liave 
been  touched."  Mr.  Dodge  may  have  the 
satisfaction  of  knowing  that  the  narrative  of 
this  affair  has  done  more  than  any  other  one 
inrtuenco  to  make  such  wrongs  as  he  has 
suffered  impossible  hereafter.  If  his  mis- 
fortunes have  been  paraded  before  the  public, 
they  have  at  all  events  created  a  widespread 
feeling  of  sympathy  witli  an  honorable  house, 
so  cruelly  ill  treated,  and  of  indignation  at  a 
system  which  justifies  such  outrages.  We 
make  no  apology  to  our  readers  for  surrender- 
ing to  this  strange  and  impressive  tale  so 
large  a  share  of  our  space  this  morning.    We 


print  a  verbatim  report  of  Mr.  Dodge's  speech 
before  the  Committee  ou  our  fourth  page — 
the  second  of  the  extra  sheet.  Jt  is  full  of 
interest  to  every  man  of  business,  and  to 
every  patriotic  citizen  who  wishes  to  see  the 
laws  justly  and  decently  administered,  and  it 
has  never  before  been  fully  told. 

***** 

And  now  comes  the  (|uestion.  why  did  in- 
nocent men  pay  S27 1,000  instead  of  going 
into  court  and  proving  iheir  innocence?  That 
too,  we  think,  is  made  clear.  T/ity  never 
knew  with  what  they  were  charged.  From  be- 
ginning to  end  they  wore  subjected  to  a  sys- 
tem of  terrorizing.  Their  books  were  kept 
from  them ;  they  were  assured  that  the  Spe- 
cial Agent  had  discovered  unheard  of  fniuds; 
they  were  told  that  their  case  was  one  of  the 
worst  in  Mr.  Jayne's  experience,  that  they 
liad  forfeited  nearly  two  millions  of  dollars; 
that  they  could  be  sent  to  jail  for  a  hmg  term 
of  years.  They  went  to  Washington,  and 
there  they  found  Mr.  Benjamin  F.  Butler,  as 
tlie  Special  Agent's  counsel,  breathing  threat- 
enings  an<l  slaughter.  Secretary  Boutwell 
urged  them  to  go  to  trial,  and  promised  if  the 
c;ise  went  against  them  to  give  it  his  personal 
consideration;  but  Mr.  Boutwell  was  then  a 
candidate  for  the  Senatr,  and  he  would  be 
out  of  the  Treasury  before  their  case  could  bo 
reached.  Besides,  it  would  be  a  terrible  blow 
to  the  credit  of  the  firm  if  the  news  should 
be  telegraphed  all  over  the  world  that  the 
Unitc'd  States  had  sued  them  for  $1,750,000 
for  alleged  frauds  upon  the  revenue.  They 
compromised  for  a  sum  which,  largo  as  it 
was.  they  could  afford  to  pay,  rather  than 
risk  the  loss  of  everything  by  an  open  fight. 
Now  that  it  is  seen  upon  how  slight  a  foun- 
dation this  great  ciise  was  built  up,  it  is  easy 
enough  to  say — Mr.  Dodge  says  himself — 
that  it  was  foolish  to  yield  to  Mr.  Jayne's 
threats.  But  it  was  not  so  easy  to  be  wise  in 
the  dark. 

The  Dodge  case  will  probably  be  the  last 
£)t  its  kind  in  our  history.  Tlio  Committee  of 
j  Ways  and  Means  has  given  an  impartial  hear- 
ing to  both  sides  of  the  question  involved  in 
it,  and  we  Ix'lieve  the  memljers  are  honestly 
bent  upon  doing  justice.  Neither  the  mer- 
chants nor  the  agents  of  the  Government  can 
complain  that  they  have  been  accorded  a 
scant  courtesy  or  an  imperfect  hearing.  In 
the  final  disiwsition  of  the  controversy  stories 
of  individtial  wrong,  like  this  story  of  Mr. 
Dodge,  must  have  great  weight  They  are 
not  exceptional.  They  illustrate  the  natural 
effects  of  the  existing  law,  the  inevitable 
abuses  which  follow  an  oppressive  and  un- 
constitutional statute. 


132 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


WHY  TIIKY  PAID. 


[Frotn  (he  Chicago  Tiubi  ne,  March  13,  1874.] 

Certain  partisan  newspapers  profess  to  be 
at  a  loss  to  understand  why  Pliolps,  Dodge  & 
Co.  consented  to  pay  a  penalty  of  $271,000 
for  an  innocent  violation  of  statute  by  wliieh 
tJie  Government  lost  the  trifling  sum  of  $1,- 
GOO.  They  cannot  understand  why  a  lirm 
which  was  consciously  innocent  should  have 
submitted  to  be  bled  to  such  an  extent  unless 
it  had  been  guilty  of  violalmg  the  revenue 
laws.  In  short,  the.se  partisan  and  protectionist 
sheets  do  not  think  it  enough  that  an  honest 
tirm  Avas  robbed  of  more  than  a  quarter  of  a 
million  by  otiicial  plunderers,  but  must  blacken 
its  reputation,  if  possible,  by  insinuating  that  [ 
it  was  in  the  habit  of  defrauding  the  revenue. 

Xo  fair  minded  and  intelligent  man  can 
have  any  dirticulty  in  understanding  why 
Phelps,  Dodge  &  Co.  preferred  to  pay  over 
the  large  sum  of  $271,000  rather  than  appeal 
to  the  courts.  Under  the  existing  law,  if  a 
single  item  in  an  invoice  is  undervalued,  the 
value  of  the  entire  invoice  is  forfeited.  The 
under  valuations  charged  against  Phelps, 
Dodge  &  Co.  afl'ected  a  large  number  of  in- 
voices, aggregating  more  than  a  million  dol- 
lars. Had  the  tirm  gone  into  the  courts  and 
lost  their  case,  they  would  have  lost  not  far 
from  a  million.  Butler  informed  them  that 
he  had  evidence  on  which  he  could  beat  them 
HI  any  United  States  court.  The  firm,  though 
consciously  innocent  of  any  intention  to  de- 
fraud the  revenue,  did  not  know  but  what 
this  might  be  true.  They  knew  what  sort  of 
a  man  Jayne  was.  They  knew  that  they  had 
been  dogged  by  spies.  It  was  a  fact,  of 
which  they  probably  were  not  ignorant,  that 
Jayne  was  in  the  habit  of  bribing  cleiks  to 
tamper  with  the  books  and  papers  of  their  em- 
ployers. Lender  these  circumstances  they  oer- 
lainly  had  no  small  reason  to  believe  that 
Butler,  Jayne  &  Co.  had  possession  of  enough 
of  forged  evidence  to  convict  them.  It  was 
altogether  natural,  therefore,  for  them  to  con- 
clude that,  since  they  nmst  needs  be  robljcd, 
it  would  be  better  to  be  robbed  of  a  quarter 
of  a  million  than  of  a  whole  million.  They 
were,  doubtless,  inlluenced  by  another  con- 
sideration, which  partisan  journals  can  hardly 
be  expected  to  comprehend.  Time  was  when 
a  mere  accusation  of  defrauding  the  revenue 
was  very  damaging  to  the  reputation  and 
credit  of  mercantile  houses.  Phelps,  Dodge 
iSf.  Co.  la))ored  under  the  impression  that  that 
.  time  had  not  gone  by.  They  dreaded  a  con- 
tiict  with  the  Government,  more  on  account  of 
the  injiu-y  their  reputation  might  sustain  than 


on  account  of  any  immediate  pecuniary  loss. 
They  were  willing  to  make  a  large  sacrifice 
to  avoid  i)ublicity,  and  the  consequent  injury 
to  their  credit.  They  may  have  been  mis- 
taken. It  may  not  have  been  in  the  power  of 
such  men  as  Jayne  and  Butler  to  injure  their 
business  standing.  It  certainly  is  now.  The 
infamous  system  of  official  blackmailing  has 
annihilated  the  moral  power  of  the  Govern- 
ment. But,  mistaken  or  not,  Phelps,  Dodge  & 
Co.  unquestionably  were  influenced  by  a  re- 
gard for  their  reputation,  which  was  perfectly 
compatible  with  the  most  upright  intentions 
in  their  dealings  with  the  revenue  officers. 
There  has  been  nothing  in  their  course,  from 
first  to  last,  wliich,  in  view  of  what  is  now 
known  concerning  Jayne  and  Jayneism,  can 
raise  a  fair  presumption  tliat  Phelps,  Dodge  & 
Co.  ever  intentionally  defrauded  the  revenue 
to  the  amount  of  one  dollar.  All  unbiased 
minds  will  admit  this,  and  even  the  extreme 
partisan  organs  may  be  constrained  to  admit 
it  one  of  these  days,  when  Butler  is  no  longer 
the  party. 


SKETCH  OF  THE  INVESTIGATION  BE- 

EORE  THE  WAYS  AND  MEANS 

COMMITTEE. 


[From  the  N.  Y.  World,  March  9,  1874.] 

It  is  now  admitted  that  the  exciting  topic  of. 
the  session  is  the  moiety  investigation  before 
the  Ways  and  Means  Committee.  The  interest 
and  excitement,  far  from  decreasing,  seem  to 
increase  daily  as  the  facts  are  revealed  before 
the  astonished  members  of  the  Committee, 

The  moiety  system  scandal,  the  infamous 
informer  and  spy  system,  had  during  last  fall 
reached  a  stage  which  made  it  perfectly  cer- 
tain that  some  investigation  would  be  neces- 
sary. Congress,  like  Macbeth,  had  heard 
•'  curses,  not  loud  but  deep,"  and  it  seemed 
necessary  to  do  something.  Y^et,  so  deeply 
rooted  is  the  evil,  that  many  friends  of  the 
dominant  party,who  are  anxious  to  have  peace, 
concluded  tosinq)ly  patch  upa  modification  of 
the  infamous  law  of  1803,  and  then  letthhigs 
gradually  go  back  into  the  old  groove.  It  was 
not  until  the  Sanborn  ctmtract  scandal  came  to 
light,  and  the  impudent  and  indecent  anxiety 
on  the  part  of  Gen.  Butler  to  suppress  revela- 
tions on  the  subject,  that  the  couniry  was  real- 
ly aroused  ;  yet  the  Sanborn  case  might  have 
occupied  attention  enough  to  smother  the  Cus- 
tom House  seizure  scandals ;  but  fate  ordained 
it  otherwise.  Mr.  Jayne,  without  consulting 
any  of  his  friends,  went,  on  the  21st  of  Eel)ru- 


AX  EXTRAORDIXARY  HISTORY. 


13:^ 


ary,  before  the  Ways  and  Means  Committee, 
stited  that  he  hal  resigned  liis  position  as 
Special  A<j;ent,  that  he  now  was  a  private  citi- 
zen, and  was  ready  to  tlirow  lijrht  on  the  sub- 
ject of  seizures  of  books  and  papers.  The 
Committee  felt  inclined  to  hoar  him,  but  it  soon 
became  pretty  evident  that  an  ex-parte  state- 
ment would  be  unjust  to  the  absent  accused 
merchants. 

The  hearing  was,  therefore.  i>ostponed  to  the 
:{d  of  March,  when  the  implicated  merchants 
were  to  be  present  and  face  the  man  whose 
very  name  inspired  them  with  terror. 

It  is  a  remarkable  fact,  tliat  during  the  first 
two  hearings  of  Mr.  Jayne,  on  the  2l8t  and 
22d  of  February,  such  was  the  vilbinous  sys- 
tem of  fraud  and  s.v.stematic  cheating  that  the 
Committee  inclined  to  think  that  it  would  be 
even  dangerous  to  change  tlie  law  of  1 863.  It 
need  hardly  be  said  that  the  absent  merchants 
were  aroused,  and  they  assemble<l  in  force  last 
Tuesday  morning,  the  Hd  of  March.  In  the 
mertntime  the  Committee  agreed  to  one  prin- 
cipal procedure,  viz.,  that  they  were  not  sitting 
as  a  court  to  decide  the  guilt  or  innocence  of  in- 
dividual cases,  that  the  sole  object  of  inquiry 
was  to  find  whether  the  law  of  1863  bore  hard 
on  merchants,  and  whether  or  not  it  shoiUd  bo 
abrogated. 

But  they  reckoned  without  their  host  It 
was  impossible  to  conduct  an  inquiry  of  this 
kind  without  listening  to  the  alleged  hardships 
and  outrages  suffered  by  the  most  intluentiail 
members  of  the  mercantile  communit}-. 

On  Tuesday.  March  :{,  Mr.  .layne  in  the  pres- 
ence of  a  full  Committee  and  an  audience  com- 
prising a  delegation  from  the  Now  York,  Bos- 
ton, Philadelphiiv  and  Baltimore  Chaml>ers  of 
Commerce,  headed  by  Mr.  Jackson  S.  Schultz 
and  others,  also  in  presence  of  Mr,  William 
E.  Doelge,  opened  the  proceedings.  Unfortu- 
nately for  the  much  feared  late  Si)ecial  Agent, 
he  was  smarting  under  some  .severe  strictures 
that  apfxjared  in  the  public  pres.s,  and  he  en- 
tirely lost  control  over  himself.  He  stigma- 
tized the  mercantile  conimunity  as  a  "set  of 
infernal  thieves."  and  the  audience  present  Jis 
their  representatives.  He  actually  told  the 
Committee,  and  no  doubt  believed  it.  that  the 
merchants,  press,  and  lawyers  had  combined 
in  a  conspiracy  against  him  to  blacken  his 
character.  In  short,  he  fully  proved  the  truth 
of  the  classic  adnge,  '•  whom  the  gods  \\  ish 
to  destroy  they  first  make  blind  or  mad.'' 

Had  Mr.  Jayne  simply  confined  himself  to 
a  statement  of  the  working  of  the  law  of  1 803  ; 
had  he  early  and  collectedly  stated  that  he 
felt  it  his  duty  to  s  ow  favor  to  no  one  under 
that  section;  that  the  essence  of  the  law  may 
be  hard  and  harsh,  but  that  was  not  his  busi- 


ness, as  he  simply  carried  the  law  out;  liad  he 
refmined  from  individualizing  ca.ces.  the  odium 
would  naturally  have  fallen  on    the  law  of 
1863.    But,  in  defending  tlie  provisions  of  this 
act,  he  tried  lo  c  fiivuice  the  <>ommittee  that 
the  extortion  of  two,   three  or  four  hui>dred 
thousand  dollars  at  one  fell  swoop  from  a  firm, 
and  the  subjecting  them  to  all  the  scandal, 
bad  repute,  and  villanous  slanders  that  hired 
spies  could  infiict,  far  from  i>eing  a  hardship, 
was  an  operation  not  only  pleasant  and  l>e- 
nevolent  but  a  very  meritorious  employment. 
for  which  he  deserved  a  vote  of  thanks  from 
Congres-".  Such  a  course  was  surely  sufficient 
to  weaken  oven  an  ex-parte  statement.     On 
Wednesday,  having  cooled  off  somewhat.  Mr, 
Jayne  n)ade  a  more  collected  and  calm  sUite- 
ment   to  the  Committee.     On  Thursday  Mr. 
Dodge  related*in  full  his  case,  which  had  l>e- 
come  a  cause  reUbre  all  over  tlie  world.     Mr. 
Dotlge  admitted  unreservedly  -hat  he  and  his 
firm  had  made  incornet,  nay,  fal.'^e  statements 
over  and  over  again:  that  they   had  received 
slips  which  by   right   ought    lo  have  gone  to 
the  Custom  House:  but  he  also  f'ldly  lonvinced 
the  Committee  that  such  breaches  of  the  law 
could  not  possibly  havr  hocn  comTiiitted  with 
intent  to  defraud  (lovcrnment,   inasmuch  as 
the  whole  alleged  loss  to  the  Treasury  in  five 
years  was  only,  aceonlingto  Mr,  George  Blisn, 
Jr.'s,  stAlement,  $1,664.72,     .\  r.  Dodge  also 
frankly  staled  that  the  niere  fact  of  :i  Custom 
House  suit  against  Ins  linn  being  talked  of  had 
damaged  their  credit  both  at  honjc  and  jibroad. 
I  He  might  have  gone  I'u  ther.     I   su|»iK»se  he 
might  have  related  sjX'cific  facts  to  verify  his 
i  statement.     There  is  n<>  doubt  now  at  all  that 
I  the  true  cau«e  of  the  setilement  was  not  the 
I  fear  of  scamhil  or  even  black  mad,  but  cimply 
'  the  fact  that  it  was  cheaper  to  bleed  for!*30(),- 
I  000  and  have  done  with  it  than  to  risk  the 
j  stoppage  of  a  business  iluit  amounts  to  $8,- 
I  000,000  annually.     No  doubt  the  settlement 
j  was  the  cheapest  way  out  of  the  difficulty. 
!  Mr.  Dodge's  statement  as  to  the  special  agent 
I  system    of  obtJtining   intonnHtion  was    very 
I  damaging.    There  is  something  very  repidsive 
I  to  the  Anglo-.Saxon  mind  in  the  idea  of  the 
I  rjovernnjcnt  spying  ujjon  private  citizens  and 
I  hiring   clerks  hitherto  thought   fully  in    the 
I  confidence  of  their  employers  to  act  :>s  spies 
I  in  the  counting  housf  and  run  out  round  the 
}  corner  to  send  information  wliere  it  would  do 
;  in  >st  go<Ml.  or  rather  most  h.irm.     It  was  on 
1  Thurstlay  thai  the  Cominiit-e  began  to  fv-el 
somewhat  ashamed  of  the  outrageous  law  that 
co\dd  sustain  so  infamous  a  system.  Tho  Bos- 
ton and   Xew  York   hiwyers,  Mr.  H\do  and 
Mr.  Brain.ird,  followed  Mr.  Dodg  *,     Lawyers 
I  at  best  will  talk  like  lawyers,  and  in  a  case  of 


134 


CONGRESS  AND   PHELPS,  DODGE  &  CO. 


this  kind  eloquence  is  tlirown  away.  It  is  tlio  j 
man  wlio  lias  snffered  disgraceful  ontrajres 
from  a  villanons  law  who  will  nii.ke  the  sure- 
est  impression.  To-day  (Saturday)  the  cul- 
miniitin<j:  point  was  reached,  and  it  must  be 
c  -nfessed  that  Mr.  Jackson  S  Schultz  carried 
off  the  hmrels.  As  n  merchant  lie  fell  for  his 
class,  and  in  luimeasured  terms  lip  denounced 
not  only  llie  law  but  the  spies,  detectives,  and 
their  lawyers.  He  did  not  spjire  General  But- 
ler, and  at  tlie  close  of  a  two  hours'  speech 
lie  left  the  impression  on  the  Committee  that 
Jayne  had  lold  the  truth  in  one  thing  at  any 
rate — there  were  "a  lot  of  internal  thieves 
and  their  rcpresentfitives  "  somewhere. 


[Fimri  the  Boston  Commercial  Bulletin,  March 

14,  1874.] 

Some  months  since,  in  referring  to  the 
case  of  Messrs.  Phelps,  Dodge  &  Co.,  of  New 
York,  we  expressed  the  decided  conviction 
that  this  firm  was  entirely  innocent  of  any 
criminal  intent,  and  that  theirs  was  a  techni- 
cal error  only,  compared  with  which  the  pen- 
alty paid  was  a  scandal  upon  the  good  name 
of  the  Government.  The  wreck's  develop- 
ments have  more  than  confirmed  our  words, 
for  it  now  appears,  by  Informer  Jayne's  own 
w^ords,  that  the  over  valuations  in  this  lirm's 
ill  voices  exceeded  the  under  valuations,and  that 
they  had  in  reality  paid  the  Government  7><ore 
than  was  its  due. 

The  country  cannot  make  good  the  wrong 
that  has  been  done  in  its  name,  but  it  can  so 
revise  the  statutes  that  such  outrages  sliall  be 
impossible  in  the  future. 

If  "  Jin  honest  confession  is  good  for  the 
soul,"  how  excellent  for  what  is  spiritual 
in  Informer  Jayne  must  be  the  disclosures 
which  he  has  made  of  late.  Having  secured 
for  his  own  use  the  lion's  share  of  the  plun- 
der, ho  now  virtually  turns  State's  evidence, 
becomes  an  informer  upon  his  late  fellow  in- 
formers, and  tells  us  that  he  left  the  service 
because  ho  "  could  not  stay  among  a  oack  of 
thieves."  It  must  bo  exceedingly  comforting 
to  the  eminent  firm,  Messrs.  Pheips,  Dodge  & 
Co.,  who  have  been  dragged  before  the  pub- 
lic as  culprits,  to  know  that  this  worthy,  now 
that  their  honor  is  fully  vindicated,  assorts 
that,  had  he  fully  understood  their  case,  he 
never  would  have  prosecuted  them ! — Ihkl. 


[Fjom  the  New  Orleans  PicAYt'NE,  March   15, 
1874.] 
This  evidence  of  Mr.  Dodge  reveals  a  fear- 
ful condition  of  affairs  under  the  "xisting  law. 


No  mercantile  house  is  safe  from  spies  and 
informers.  The  most  innocent  error  of  ap- 
praisement is  distorted  into  systematic  rob- 
bery, and  at  once,  without  investigation  or 
trial,  the  books  of  the  house  are  seized  and 
the  business  thrown  into  confusion.  How- 
ever innocent  the  merchant  may  be  he  pre- 
fers to  pay  an  enormous  sum  of  money  rather 
tlian  run  the  risk  of  having  his  cjise  passed 
upon  by  an  unknown  Secretary  of  the 
Treasury.  The  fears  of  Mr.  Dodge  lest  Secre- 
tary Boutwell  might  be  succeeded  by  some 
one  less  honest  and  conscientious,  were  not  ill 
founded.  The  present  Assistant  Secretary  of 
the  Treasur}',  Sawyer,  was  a  carpet  bag  Sena- 
tor when  the  bill  allowing  the  Secretary  to 
make  special  contracts  with  informers  became 
a  law.  It  was  Sawyer  who  proposed  and 
rushed  the  bill  through  the  Senate.  It  was 
Butler  who  rushed  it  through  the  House.  It 
was  Butler  who  was  the  attorney  of  the  in- 
former. It  was  Butler  who  secured  Sawyer's 
appointment  as  Assistant  Secretary,  and  it 
was  very  natural  tkat  Mr.  Dodge  should  pre- 
fer paying  $271,000  to  having  Jiis  case  sub- 
jected to  a  new  Secretary,  who  might  be  either 
Butler  or  Sawyer. 


'IFrom  the  New  York  Journal  of  Commerce, 
March  7,  1874.] 

"  They  w^ere  fools  for  paying  the  money," 
says  Mr.  Wm.  E.  Dodge,  speaking  (before  the 
Ways  and  Means  Committee)  of  his  own  firm 
and  their  compromise  with  the  Government, 
for  alleged  revenue  frauds,  by  the  payment  of 
$271,000.  Men  are  apt  to  think  thus  poorly 
of  themselves  when  they  have  parted  witli 
good  money  unnecessarily  ;  especially  if  they 
have  used  it  to  buy  off  pn>secution.  or  silence 
blackmailers,,  and  find,  after  all,  that  it  does 
not  prevent  a  scandal.  It  would  l)e  impolite 
for  ourselves  to  employ  toward  Phelps,  Dodge 
k  Co.  the  language  which  the  head  of  the 
house  is  pleased  to  utter.  They  must  be 
the  best  judges  of  the  extent  of  the  error 
which  they  have  committed,  in  seeming  to  ac- 
knowledge the  justice  of  the  Government 
cliarges  against  them,  by  a  compromise  in- 
volving so  largo  a  sura.  For  our  part,  we 
will  be  courteous,  and  speak  of  it  as  a  mis- 
take. It  is  always  a  mistake  for  a  man  who 
is  innocent  of  intentional  wrong  doing  to  ac- 
knowledge, under  threats  or  pressure,  that 
lie  is  guilty  of  it.  Better  impoverishment,  or 
imprisonment,  or  any  privation  or  suffering, 
than  such  a  stultification.  It  is  impossible 
for  a  man  who  commits  that  folly  not  to  lose 
some  of  his  self-respect — one  of  the  greatest 
of    earthly    possessions;     and   he   certainly 


AN  EXTRAORDINARY  HISTORY. 


135 


(liiiiinlslies,  if  lie  does  not  AvlioUy  forfeit  the 
respect  of  liis  friends  and  neighbors  when  liis 
timid  yielding  becomes  known.  When  we 
lirst  heard  of  the  accusations  against  Phelps, 
Dodge  it  Co.  we  advised  them  to  rest  upon 
their  innocence  and  contest  with  the  Govern- 
ment ;  and,  after  the  settlement  was  an- 
nounced, we  deplored  an  act  which  appeared 
on  its  face  to  give  some  color  to  the  charges. 
The  sequel  shows  that  our  advice,  if  followed, 
would  probal)ly  have  saved  to  the  firm  their 
money.  The  firm  seems  to  have  been  stunned 
and  unnerved  by  the  threats  of  Jayne  and 
his  accomplices.  Mr.  Dodge  says  the  accusa- 
tions struck  him  like  a  "  thunderbolt,"  and 
elsewhere  compares  thoui  to  "  a  pistol  held 
at  tlie  ear;  it  was  money  or  ruin."  In  such  cases 
the  real  courage  of  u  man  is  tried.  Consider- 
ing the  trenH'udous  enginery  of  oppression 
wielded  by  the  revenue  service,  it  is  not  in 
the  least  surprising  that  Phelps,  Dodge  &  Co. 
abandoned  their  true  defence  and  made  a 
weak  surrender.  Wo  wish  to  judge  them 
most  kindly,  and  to  regard  them  as  the  vic- 
tims of  a  wicked  terrorism  and  unpanilleled 
outrage.  A  great  many  other  men  in  the 
world  would  have  succumbed,  terror  stricken, 
to  such  fearful  odds.  But  there  are — though 
these  are  rare  specimens — men  who,  mighty 
in  their  conscious  innocence  of  wrong,  would 
never — never — have  paid  the  Government 
one  dollar  in  compromise  for  frauds  never 
fommitted.  They  would  have  put  their  for- 
tunes at  stake,  if  need  bo,  and  would  have 
triumphed  at  the  close.  '•  (We)  they  were 
fools  for  paying  the  money,"  says  Mr.  Dodge. 
We  advised  them  to  go  into  court  and  brave 
the  consequences.  So  did  Secretary  liout- 
well,  as  we  now  learn  from  Mr.  Dodge ;  and 
he  adds:  "  If  (we)  they  had  followed  the 
Sccretiiry's  advice  (we)  they  probably  would 
not  have  paid  $271,000."  Mr.  Jayne  himself 
now  admits,  virtually,  that  a  judicial  prosecu- 
tion wo\ild  have  failed.  lie  t  Id  the  Com- 
mittee on  Thursday  that  "  if  he  had  known 
that  there  had  been  any  overpayment  on  the 
part  of  Phelps,  Dodge  &  Co  he  would  have 
obtained  their  release.  Ho  did  not  know 
that  there  had  been  more  over  valuation 
than  muler  valuation,  or  he  woi.ld  not  have 
proceoticd  against  them."  Exactly;  and 
where  could  Phelps,  Dodge  it  Co.  prove  this 
fact — one  of  the  most  convincing  evidences 
of  their  innocence — except  in  a  court  of  jus- 
tice ?  To  that  tribunal  they  should  have  ap- 
pealed; and  had  they  done  so  boldly,  we 
l>elieve  that  the  prosecution  woidd  Inive  been 
glad  to  back  out.  and  the  case  never  would 
have  gone  to  trial;  and,  if  it  had  been  tried, 
that  Phelps,  Dodge  &  Co,  would  have  been 


honorably  acquitted.  The  trial,  had  it  taken 
place,  would  have  brought  the  pettifogging, 
sneaking  course  of  the  Governinent  toward 
merchants  into  just  contempt,  and  would 
have  done  much,  by  arousing  public  indigna- 
tion, to  break  up  the  infamous  practice  of 
which  the  imi)orters  complain.  Phelps, 
Doilge  it  Co.  would  have  saved  their  money 
had  they  taken  our  advice — now  seconded, 
as  we  learn,  by  Secretary  Boutwell;  and, 
far  more  than  this,  they  would  have  avoided 
the  'apiKjarance  of  evil,"  which  inevitJiV)ly 
attaches  to  a  compromiso  such  as  they  finally 
made. 

The  moral  of  their  case  should  sink  deep 
into  the  hearts  of  all  merchants  who  are 
liable  in  their  business  to  l^ecomo  victims  of 
official  blackmailing.  We  are  not  without 
hope  that  the  exposure  of  the  revenue  abuseR 
afforded  by  Mr.  Dodge  in  his  frank  stiitement 
before  tlio  Committee  will  contribute  to  the 
breaking  up  of  the  atrocious  system,  and  that 
hereafter  honest  imjxjrters  will  not  be  fright- 
ened into  the  payment  of  compromises  or 
hush  money.  If  they  do  commit  that  folly 
after  this  warning,  they  must  not  l)e  surprised 
if  the  public  interpret  it  to  Ix;  a  virtual  ad- 
mission of  guilt. 


CUSTOM    HOUSE    ABUSES. 


[From  the  Springfield  Republican,  Match  14, 
1874.] 

The  hearing  before  the  Ways  and  Means 
Committee  in  regard  to  Custom  House  al>uses, 
to  which  the  merchants  and  the  Government 
officials  have  l)een  the  principal  parties,  has 
elo.sed,  and  wo  shall  hear  nothing  more  of  it 
till  the  rejK)rt  is  presented  in  Congress.  Judge 
Noah  Davis  may,  jKjrhaps,  Ik;  allowed  to  come 
forward  and  tell  the  Phelps  and  Dodge  story 
over  again,  as  ho  is  said  to  1x3  anxious  to  do. 
in  order  to  defend  himself  from  the  imputa- 
tions of  Jayne  and  Bliss,  but  we  are  already 
in  i)osse,ssion  of  the  vital  facts.  Let  us  just 
run  them  over  and  got  them  into  a  portable 
form. 

The  investigation  was  no  sooner  opened 
than  Jayne  sprang  to  the  front.  He  was 
anxious  to  go  through  the  cases  of  these 
thievish  merchants,  and  displayed  an  immense 
book,  wherein  their  evil  deeds  were  written. 
His  appearance  and  audacity  produced  a 
striking  impression  upon  the  Committee.  But 
it  is  an  extraordinary  fact  that,  at  the  subse- 
quent hearings,  when  the  mercljants  were 
present,  Jayne,  after  his  personal  dcnunciu- 


136 


CONGRESS  AND  PHELPS,  BODGE  &  CO. 


tions  had  been  checked  and  suppressed,  sunk 
into  an  iusio^nilicant  witness  for  the  Govern- 
meut.  and  tinally  turned  State's  evidence, 
Jayne  seems  to  liave  been,  in  short,  a  perfect 
specimen  of  the  bully — valiant  and  swaggeriuf? 
as  long  as  such  arts  availed,  a  trcacliorous 
and  winning  coward  when  put  to  the  test. 
If  he  found  he  could  not  squeeze  blood  from 
a  turnip,-  he  was  content  to  munch  it  in  a 
corner.  His  testimony  confirms  what  we  said 
the  other  day,  about  the  necessity  of  liberal 
"division."  Out  of  the  $328,000  which  has 
fallen  to  his  share,  only  $140,000  has  stuck 
in  his  own  pocket.  Somebody  in  the  Treasury 
Department,  who,  "  like  himself,  had  informa- 
tion 'concerning  a  certain  house,"  ho  had 
been  compelled  to  share  with.  He  paid  Butler 
a  large  fee  in  the  Phelps  &  Dodge  case,  and 
$1,500  for  counsel  in  other  cases.  He  charged 
that,  in  5."5  out  of  61  cases  that  had  come 
within  his  knowledge,  there  had  been  collu- 
sion with  customs  officers.  In  his  last  hearing 
this  Jayne  appealed  to  the  Committee  to  do 
something  to  reform  the  morals  of  the  coun- 
try, and  closed  with  the  assurance  that 
"while  thieves  were  in  office  ho  looked  upon 
the  seizure  of  books  as  no  better  than  high- 
way robbery."  In  short,  the  testimony  of 
Jayne  is  precisely  that  of  an  ignorant,  vulgar 
bully,  who  comes  on  to  the  stand  feeling  that 
lie  can  carr}^  all  before  him,  and  whose  testi- 
mony either  isn't  to  the  point  or  collapses 
upon  the  slightest  examination. 

The  testimony-  of  the  merchants  was  that 
of  more  cultured  men.  Tiie  Boston  represen- 
tfitives  prosontod  the  obvious  reasons  in  favor 
of  the  reforms  which  we  outlined  a  few  days 
ago,  but  no  one  showed  so  much  personal 
acquaintance  with  the  hardships  of  unjust 
penalties  as  Jackson  S.  Schultz  of  Ne  *v  York. 
He  assumed  that  it  was  for  the  interest  of  the 
great  body  of  honest  merchants  to  liave  the 
revenue  law  enforced  strictly,  and  went 
through  with  the  process  of  importing  from 
beginning  to  end.  Mr.  Schultz  alleged  that 
the  regulations  of  the  Treasury  on  importa- 
tions arc  voluminous  and  inaccessible,  and 
explained  the  ease  with  which  they  may  be 
innocently  violated. 

District  Attorney  George  Bliss  was  the 
chief  witness  in  rebuttal,  and  we  must  confess 
to  being  struck  with  the  weakness  of  his  plea 
for  the  Custom  House  practices.  It  has  been 
privately  understood  from  Mr.  Bliss  that  he 
has  po.sitive  proof  of  intentional  fraud  on  the 
part  of  Phelps  &  Dodge.  He  did  not  pro- 
duce it.  Ife  declared  that  the  Chamber  of 
Commerce  resolutions  were  got  up  by  outside 
parties  to  subserve  personal  interests,  but 
presented  no  proof  of  it.     He  defended  moie- 


ties on  the  ground  of  their  antiquity,  and 
declared  that  all  compromises  were  ratitied 
by  the  Secretary  of  the  Treasury.  Ho  was 
apparently  in  favor  of  establishing  a  sliding 
scale  of  forfeitures,  so  that  fraud  in  ono 
item,  if  it  were  a  large  invoice,  sliould  not  for- 
feit the  whole  of  it,  but  should  forfeit  more 
than  the  single  item,  which  oftentimes  would 
not  carry  a  sufficient  penalty.  But,  as  a  de- 
fence. Mr.  Bliss's  effort  was  rather  tame,  es- 
pecially after  tlie  closing  argument  by  Messrs. 
Dodge  and  Schultz. 


[Indianapolis  (Indiana)  News,  March  17,  18T4.] 

Last  winter,  when  the  firm  of  Phelp.«»,  Dodge 
(fe  Co.,  of  New  York,  were  accused  of  viola- 
tions of  the  revenue  law,  and  comi)roniise(l 
the  cases  by  paying  ncnrly  three  hundred 
tho\isand  doilar.«,  we  were  mclined,  in  com- 
mon with  many  others,  to  think  that  fln-y 
must  be  guilty  or  they  would  not  consent  to 
pa_y  such  an  enormous  sum  Later  light  Inis 
shown  that  we  did  them  injustice — injustice 
so  great  that  we  should  be  unwonhy  of  the 
name  of  fjiir  minded  journalists  if  we  did  not 
acknowledge  it.  They  were  then  so  henniiod 
in  by  spies  and  informers,  so  threatened  by 
phniderers  and  leeches,  that  they  could  not  do 
otherwise,  beir.g  human.  The  firm,  one  of  the 
oldest  in  the  country,  and  one  of  unblemished 
reputation,  were  suddenly  accused  of  having 
defrauded  the  Govermnentby  the  use  of  false 
invoices.  They  were  thunder  stricken  at  tin..' 
accusation,  having  paid  the  Government  mil- 
lions of  dollars  in  dutie.s.  without  the  least  in- 
sinuation of  irregularity,  to  say  nothing  of  a 
premeditated  attempt  to  steal.  Their  books 
and  papers  were  put  at  the  service  of  the 
revenue  authorities  headed  by  special  inlorm- 
er  Jayne,  a  clerk  who  had  garbled  accounts 
coming  under  his  inspection,  for  the  purpose 
of  falsely  accusing  them  and  profiting  him- 
self. It  is  unnecessary  to  relate  the  details. 
They  were  dragged  into  court  on  a  charge  of 
having  cheated  the  Government  out  of  .$1 ,600 : 
they  were  told  by  the  attorney  for  the  infor- 
mer.s — Gen.  Benjamin  F.  Butler — that  he  had 
evidence  that  would  convict  them  and  would 
forfeit  the  wliole  invoice,  worth  over  a  million 
oi'dolhirs.  Beset  by  spies,  attacked  by  con- 
fidential employes,  badgered  by  a  long  array 
of  counsel,  and  harrowed  by  the  fear  of  im- 
mense ])ecuniary  hjss  .'uid  damage  to  reputa- 
tion, it  is  not  stratige  that  when  the  authori- 
ties offered  to  comproini-e  for  $271,000,  they 
accepted  the  offer,  in  order  to  save  further 
trouble.  Who  would  not  have  done  it  under 
the  circumstances,  when  the  law  is  so  com- 


AS  KXTRAORUINART  BISTORT. 


137 


plicated  that  oven  tlie  most  honest  mnn  may 
unwittingly  violate  it?  Though  conscious  of 
rectitude  and  hcnesty,  they  paid  the  money 
rather  than  to  take  it  into  the  courts,  at  the 
risk  of  losing  more  money  and  gaining  damag- 
ing notoriet3^  Now  they  come  forward  and 
show  all  the  circumstances,  and  no  one  can 
read  Mr.  Dodge's  statement  and  not  V>eliovo  it. 
unless  he  be  a  man  who  has  lost  all  faith  in 
his  fellovi^s,  except  in  their  total  and  unquali- 
fied badness. 


[From  Vie  Trenton  (N.  J.)  Daily  Pubmc 
Opinion.] 

It  is  duo  to  the  truth  of  history,  as  well  a»to 
tlie  fair  fame  of  one  of  the  most  honorable 
importing  mercantile  tirms  of  New  York  city — 
the  house  of  Phelps,  Dodge  k  Co. — that  Mr. 
William  E.  Dodge  should  l)0  heard  in  his  de- 
fence against  the  charge  that  the  house  had 
defrauded  the  revenue,  and  in  explanation  of 
the  reasons  that  induced  them  to  yield  to  the 
unjust  demands  of  the  Government,  jit  the  in- 
stigation of  the  informer  Jayne,  and  under  the 
terrorism  to  which  the}'  were  subjected  by 
\\\%\\  oniicials,  "We  have  not  space  for  the 
whole  of  his  vindication  Ixjfore  the  Committee 
of  Ways  and  Means,  but  we'll  try  and  give  its 
subsumce  as  brioHy  as  may  be.  The  whole 
transaction  on  the  part  of  the  Government 
was  a  crime  of  the  liighest  magnitude  against 
the  rights  and  roi)utation  of  the  private  citi- 
zen. 


\From  Ihe  Dubuque   (Iowa)  Tblbokax.  }farch 
14,  1874.] 

It  came  like  a  thunder  clap,  the  announcO' 
ment  last  year  that  the  pious,  philanthropic 
William  Iv  Dodge  and  his  ])artners  Jiad  l^een 
detected  in  systematic  frauds  upon  the  reve- 
nue. Can  it  be  possible,  everybody  asked,  that 
this  long  established  firm,  claiming  to  be  the 
very  soul  of  honor  and  integrity,  has  been  dis- 
pensing charities  with  one  liand  and  stealing 
from  the  Goverimienl  with  the  other  ? 

And  when  the  announcement  camo  that 
;he)'  had  comi>romised,  people  accepted  as 
true  the  charges  made  by  Jayne  &  Co.,  and 
began  to  doubt  whether  there  really  was  any 
fairness,  integrity  and  honor  in  this  world.  It 
was  a  severe  shock  to  our  belief  in  commer- 
cial honor  and  honesty  when  such  r.  house  as 
Phelps,  Dodge  &  Co.,  should  pay  over  $200,- 
000  and  compromise  a  government  suit  against 
them  for  alleged  fraud.  In  view  of  the  above 
facts,  jud;.;e  with  what  a  feeling  of  satisfaction 
and  relief  wo  have  read  Mr.  Dodge's  speech 


of  vindication  before  the   Ways  and  Means 
Committee  at  Washington. 

More  satisfactory  reading  has  not  been 
spread  before  New  Yorkers  for  a  long  time. 
It  restores  confidence  in  human  nature,  and 
renders,  if  possible,  still  more  odious  the  Jayne 
gang.  William  E.  Dodge  has  ever  l)een  first 
and  foremost  in  philanthropic  and  religious 
enterprise  in  New  York,  and  you  may  V»e  sure 
that  it  is  a  matter  of  no  little  gratification  to 
his  fellow  citizens  to  thus  have  his  name 
cleared  of  the  foid  stain  which  Jayne  endea- 
vored to  fix  upon  it.  All  of  the  men  who 
liave  profited  by  this  moiety  system  here  in 
New  York  will  have  hard  work  to  hold  up 
*Jieir  heads  in  society  in  future.  They  will 
undotibtedly  always  lie  i)oi..ted  out  as  the 
moiety  men. 


DODGK  .t  BUTLER. 


[Frm  ihe  N.  Y.  World.  MarcA  21,  1874.) 
The  dullest  and  most  devout  of  the  "Repub- 
licjin  ]iarty  journals  have  been  startled  from 
their  usual  sleepy  intonation  of  the  cstaiblished 
responses  in  the  e.suiblished  party  liumy  by 
the  evidence  which  Mr.  William  K.  Dodge,  of 
New  York,  has  just  l)een  giving  1>eforo  the 
Congressional  Committee  of  itivestigation 
Into  the  working  of  the  laws  which  set  a 
premium  ujion  human  l)aseness  in  behalf  of 
the  revenue  laws.  Mr.  William  E.  Podge  is 
a  man  long  high  in  the  confidence  and  in  the 
cotmcils  of  the  Repiiblican  party.  He  i.'^  a 
very  rich  man.  a  very  religious  man  after  his 
own  lights,  a  very  respectible  man,  not  only 
from  the  point  of  view  of  Mr.  Carlyle's  Rcotek 
jtiryman,  who  defined  resi)ectability  to  be  the 
keeping  of  a  horse  and  gig.  but  from  the 
avenige  civilized  |X)int  of  view.  When  it 
was  announced  many  months  ago  that  the 
firm  of  which  Mr.  William  E.  Dodge  is  the 
head  ha<l  lx?en  charged  with  frauds  upon  the 
revenue,  and  that  tlie  charges  had  been  com- 
promised by  the  payment  to  the  Government 
of  more  than  a  quarter  of  a  million  of  dollars, 
a  thrill  of  amazement  and  horror  ran  throtigh 
tho.so  sections  of  the  community  with  which 
Mr.  Dodge  had  long  been  connected  ])olitically. 
commercially,  and  socially.  At  first  those 
sections  of  the  community  refused  to  believe 
the  story.  The  evidence,  however,  of  a  check 
for  the  full  amount  of  the  alleged  compromise 
money,  drawn  by  Phelps,  Dodge  k  Co.  in 
favor  of  the  Government  and  paid  from  the 
funds  of  the  firm,  could  not  always  be  gain- 
said. It  was  at  last  generally  though  reluc- 
tantly admitted,  even  by  the  ITnion  Leaguers, 


138 


CONGRESS  AND  PHELPS,   DODGE  &  CO. 


that  Phelps,  Dodge  Sc  Co.  must  have  fallen 
from  grace  in  a  moment  of  sore  tomptJition. 
Tliat  Phelps,  Dodge  il'  Co.  could  possil)!}-  have 
l)een  "  blackmailed  "  out  of  such  an  amount 
of  money  by  a  Republican  Government  the 
public  utterly  refused  to  l^elieve. 

But  now  wo  have  the  whole  story  delib- 
erately and  clearly  told  in  a  perfectly  respon- 
sible manner  before  a  committee  of  Congress. 
The  positive  evidence  of  Mr.  William  PI 
Dodge  lias  been  supplemented  by  the  testi- 
mony of  ex-District  Attorney  Noah  Davis,  and 
by  the  negative  evidence  of  Jayne,  who  testi- 
fies that  he  received  and  put  into  his  own 
pocket  more  than  the  whole  salary  of  a  whole 
Presidential  term  for  his  services  in  scaring 
Phelps,  Dodge  &  Co.  into  paying  over  to  the 
Government  the  great  sum  of  money  before 
mentioned  as  the  price  of  his  forbearance  to 
])ush  proceedings  against  them  for  alleged 
frauds,  based  upon  an  error  amounting  to 
something  less  than  one  twentieth  of  his  own 
gains  in  their  ease.  It  no  longer  admits  of  a 
doubt  that  Phelps,  Dodge  &  Co.  were  robbed 
(that  is  the  exact  English  word  to  describe 
the  process)  of  a  small  fortune  by  a  conspirac)^ 
of  petty  official  rogues  with  leading  Washing- 
ton politicians.  Mr.  Dodge  now  admits  that 
liis  submission  to  this  robbery  was  discredit- 
able to  himself  and  to  his  house.  No  man, 
we  suppose,  can  ever  look  back  upon  anything 
done  by  him  under  an  ignoble  duress,  physical 
or  moral,  Avitli  satisfaction.  Mr.  Dodge  is 
obviously  exasperated  by  the  reflection,  which 
has  come  to  him  rather  late  in  the  day,  that 
ho  never  ought  to  have  succumbed  to  tlie 
menaces  of  this  gang  of  official  blackmailers. 
He  gives  a  great  many  excuses  for  his  weak- 
ness in  the  matter.  The  sum  of  them  all  is 
that  he  and  his  partners  thought  it  better  to 
be  robbed  at  once,  and  have  done  with  it,  of  a 
sum  of  money,  definite  though  enormous,  than 
to  subject  themselves  to  prosecution  before 
courts  in  whose  justice  the}-  distinctly  imply 
that  the}'  had  no  confidence,  and  against  wit- 
nesses of  whose  unscrupulousness  they  unfor- 
tunately could  have  no  rational  doubt.  Of  the 
most  extravagance  of  the  terronsm  to  which 
these  respectable  merchants  paid  the  most 
monstrous  homage  we  may  have  some  notion 
when  we  find  General  Builor,  the  head  and  front 
of  the  systo?u,  openly  lauding  his  tool  and  crea- 
ture Jayne,  as  he  did  the  other  day,  for  the 
"  magnanimity  "  displayed  by  him  in  a  certain 
ease  lu  which  he  "destroj^ed  certain  letters"' 
found  by  him  among  the  papers  of  a  firm, 
which  letters  related  to  a ''woman  scrape." 
The  time  has  been  in  the  history  of  this 
country  when  a  man  wlio  had  so  much  as 
dared  to  hint  at  his  intention  of  using  the 


letters  of  a  woman  as  a  means  of  coercing  a 
man  into  the  payment  of  money  would  have 
been  caught  by  the  first  dozen  male  persons 
he  addressed  in  that  fashion  and  ducked  to 
death  in  the  nearest  horse  pond.  Now  wo 
have  the  leader  of  the  Republican  part}--  in 
Congress,  and  the  master  of  the  Republican 
President,  openly  commending  a  spy  for  his 
abstinence  from  this  infamy !  Of  course  there 
are  hundreds  of  thousands  of  men  calling 
themselves  Republicans  who  will  be  nausea- 
ted by  this  revelation  of  the  moral  and  social 
rottenness  of  their  chieftains.  Of  course  there 
are  hundreds  of  thousands  of  men  calling 
themselves  Repuljlicans  who  will  revolt  in 
honest  indignati(tn  at  the  treatment  to  which 
Mr.  William  E.  Dodge  testifies  that  he  and 
his  firm  were  subjected.  Of  course  Mr.  Wil- 
liam K  Dodge  himself,  now  that  he  has  made 
up  his  mind  at  last  to  reveal  the  degradation 
inflicted  upon  him.  will  be  ready  to  denounce 
General  Butler  and  the  other  real  authors  of 
that  degradation  as  sternly  as  the  wretched 
clerk  whom  they  suborned  to  betray  and  to 
calumniate  him,  and  as  the  vulgar  informer 
who  received  for  himself  and  for  his  princi- 
pals the  shameful  wages  won  through  that 
treason  and  that  calumny.  But  there  are 
interests  involved  in  this  matter  wider,  deeper, 
and  more  important  than  the  pecuniary  and 
the  personal  interests  of  Mr.  Dodge  and  of 
Mr.  Dodge's  partners.  The  outrages  of  which 
Mr.  Dodge  is  now  denouncing  the  extent  and 
the  intensity,  would  never  for  a  moment  have 
been  possible  had  not  the  public  sentiment 
and  the  legislation  of  this  countiy  first  been 
profoundly  debauched.  The  basis  of  all  these 
outrages  was  the  flagrant  violation  of  the 
principles  of  the  Constitution  by  the  Repub- 
lican majority  in  Congress  legislating  away 
the  sacred  muniments  and  safeguards  of 
American  liberty.  The  rights  of  persons  and 
the  rights  of  property  were  alike  violated  by 
the  satelites  of  General  Butler  and  the  Trea- 
sury ring  in  tlio  case  of  Mr.  William  E.  Dodge. 
But  had  not  Mr.  Wilham  E.  Dodge  himself  in- 
vited these  violations  in  the  case  not  of  one 
but  of  thousands  of  his  fellow  citizens  during 
the  civil  war?  Who  made  General  Butler? 
Who  invested  this  corrupt  and  unscrupulous 
politician  with  the  power  to  suggest,  to  sup- 
port, to  apologize  for  these  violations  of  the 
rights  of  persons  and  of  property?  Henry 
Ward  Beeeher  helped  make  him  when  at  the 
Fifth  Avenue  Hotel  he  nominated  Butler  for 
the  Presidency.  Those  Republicans  made  him 
who  devoted  themselves  for  years  to  the 
wicked  work  of  praising  as  patriotism  and  ex- 
alting as  virtue  the  most  lawless,  brutal,  and 
dishonest  measures  of  men  like  General  But- 


AN  EXTRAORDINARY  HISTORY. 


139 


ler.  General  Butler  himself  was  hailed  by 
them  as  a  deliverer  and  a  champion  of  free- 
dom when  lie  came  to  this  very  city  of  New 
York,  in  1863,  armed  not  with  lepal  but  Avith 
illegal  authority,  to  treat  the  fellow  citizens 
of  Mr.  William  K.  Dodge  as  insolently,  as 
bnitally,  as  basely  as  Mr.  William  K.  Dodge 
in  the  fulness  of  time  was  destined  to  l>e 
treated  by  him.  Now  that  they  are  protestfng 
with  a  tardy  courage  against  the  application 
to  themselves  of  the  violence  which  they 
applauded  when  it  was  exercised  upon  otliors, 
it  will  be  well  for  these  gentlemen,  and  well, 
too,  for  the  country  at  large  to  rememlxjr 
how  eternally  true  it  is  that  they  who  "  sow 
the  wind  must  reap  the  whirlwind." 


THE  tr?:asury  spy  SYSTKM. 


[Fi'om  the  CorregiMmdenceofthe  New  Yobk  Wobld, 
Marcfi  23.  1874.] 

Washington,  Saturday,  March  21, 

'The  nearer  you  will  get  to  it  the  less  you 
will  like  it." 

Such  were  the  prophetic  words  uitered 
twenty  years  ago  by  Marshal  Niel  to  the  com- 
bined armies  of  Franco  and  England  tlien 
laying  seigo  to  the  Malakoff.  It  may  well  be 
said  of  tlie  moiety  investigaliou  that  the 
neater  we  get  to  llie  end  the  less  it  is  liked 
by  those  whom  it  concerns.  And  in  these 
are  of  course  included  not  only  the  adminis- 
tration bui  the  very  party  ihat  made  the 
scandal  jKtssible.  Wlien,  a  month  ago,  the 
officious  Jayne  went  l)efore  the  Commilte<', 
not  only  for  a  certificate  of  character  but  for 
a  vote  of  ihanks  for  ilie  eminent  services  he 
had  rendered,  he  little  thought  of  his  own 
friends  that  lived  in  glass  houses;  his  jaun- 
diced eye  only  saw  his  enemies  Jt  seems 
now  that  he  as  well  as  m"st  of  his  intimate 
friends  will  como  in  for  tl»e  'la-hes,"  and 
with  the  exception  of  his  enemy.  Judge  Noah 
Davis,  all  the  rest  are  likely  lo  triumph.  The 
fact  is,  Jayno  felt  very  mucli  like  a  London 
(juack  doctor,  who  advertises  as  the  *'  silent 
friend,"  and  who  feels  sure  ti.at  none  of  his 
viciims  will  expose  him,  a.«,  naturally,  they 
would  expose  themselves.  Jayne  at  first  had 
his  full  say.  lie  made  a  clean  sweep,  atid 
called  the  New  York  merchants  a  set  of  infer- 
nal thieves,  and  the  deputitions  of  gentlemen 
from  Now  York,  Philadelphia,  and  Baltimore, 
with  Jackson  Schultz  at  their  head,  the  roprc* 
scntiUives  of  infernal  thieves.  To  his  great 
di.sg)i8t  and  astonishnjcnt  neither  the  "  mfer- 
nal  thieves"  nor  their  "representatives"  took 
kindly  to  Mr.  Jayne's  admonition,  but  actually 


made  certain  exposures,  which  put  quite  a 
different  complexion  on  the  whole  business 
in  hand.  First  came  Mr.  Dodge,  and  told  the 
truth,  viz.,  that  he  was  more  or  less  bewil- 
dered, frightened  and  coerced  into  a  squeeze 
of  $271,000.  This  old  gentlemen  did  even 
complain,  to  the  disgust  of  .Jayne,  that  his 
clerks  were  deliauched  into  spies ;  that  lie  and 
his  partners  were  threatened  with  Ludlow 
Street  Jail  because  they  committed  the  great 
crime  of  burning  up  old  letters  at  the  end  of 
the  year  without  asking  the  special  agent's 
leave.  The  Phelps-Dodge  crime  was  further 
fully  proven  by  this  very  investigation,  and 
resulted  in  the  followii  g  succinct  resume, 
viz: 

First — Subscribing  to  incorrect  or  even 
false  oaths  by  the  score. 

Second — Importing  $17,000,000  goods. 

r/jm/— Paying  thereon  .'«;400,000  duticB. 

Fourth — rndervahiing  $6,568. 

Fifth — Clieating  Governmeni  out  of  $1,658 
78  duties;  and 

Sj;r//<— Being  obliged  to  pay  $271,000 
fine. 

This  terrible  accusation  looks  more  like  a 
whitewash  than  anything  that  could  possibly 
have  been  done  for  the  House  by  even  Noah 
Davis.  Mr,  Jayno  had  no  idea  that  Mr. 
Dodgo  would  dare  to  face  the  music,  but  he 
did,  which  was  no  doubt  very  unhandsome  of 
l»im.  Next  came  the  Boston  people  with  a 
long  list  of  complaints  aud  last  came  the  ter- 
rible Jackson  S.  Schullz  and  sf)oko,  not  as  a 
man  that  had  been  "struck"  ])ut  as  a  mer- 
chant and  bank  director  who  clearly  finds  it 
to  his  intcresit  and  to  the  interest  of  the  bank- 
j  ing  and  financial  system  of  the  country  in 
[  genenil,  and  New  York  in  particular,  that 
nicrchahts  should  no  longer  be  ex  post  d  to  bo 
•struck."  What  seemed  to  sink  dee])est  into 
lh«'  niinds  of  the  Committee  was  Mr.  Schultz's 
statement  that  a  firm's  credit,  be  it  ever  so 
good,  w<uld  be  immediately  tiunted  if  it  was 
[  noised  about  that  it  was  "  struck  "  by  the 
Custom  House.  He  did  not  disguise  the  fact 
that  bills  of  such  firms  current  yesterday  only 
as  a  greenback,  would,  if  lainted  by  a  Custom 
House  implication,  be  refused  discount  accom- 
modation the  Ibllowing  day.  This  simple 
statement  did  more  damage  to  the  Jayne 
system  and  explained  the  mysterious  settle- 
ments more  effectually  than  all  that  was  said 
either  before  or  after  his  evidence.  Mr. 
Jayne  being  left  in  a  damaged  condition, 
somehow  became  all  at  once  more  genial  to 
the  mercantile  commun  ty.  True,  he  by  no 
means  changed  his  mind  about  the  ''infernal 
thieves  "  and  their  representatives,  but  in  bis 


140 


CONGRESS  AND  PHELPS,   DODGE  A  CO. 


cross-examinjition  ho  sent  a  thunderbolt  into 
the  camp,  and  told  the  Committee  that  there 
are  other  "infernal  thieves"  somewhere  else 
who  are  in  the  direct  employ  of  the  Custom 
IFouse,  and  whom  lie  could  not  get  removed, 
and  on  whose  account  ho  "quit."  By  a 
sinj^le  sentence  ho  implicated  some  throe 
score  clerks,  against  whose  names  he  had  put 
a  red  m^rk.  Unconsciou-sly  ho  had  also  to 
drag  in  his  groat  protector,  General  Butler, 
who  was  his  counsel,  and  w!io  got  a  sliare  of 
the  "  swag."  Jayno's  statements  loft  no 
alternative  to  the  (Committee,  and  they  invited 
the  Collector,  Xaval  Officer,  and  Surveyor  of 
New  York  to  come  and  give  evidence  This 
invitjition  was  very  much  like  the  farmer's 
wife's  invitiition  to  the  ducks:  "Ducky, 
ducky,  C(mie  to  be  killed."  They  wisely  re- 
fused. (I  mean  the  customs  officials  and  not 
the  ducks.)  Not  so  did  the  redoubt;iblc 
George  Bliss,  who  was  not  invited  at  all.  Ho  j 
went  before  the  Committee  and  declared  he  | 
knew  more  about  seizures  and  the  law  than  i 
all  of  them  put  together.  "  Decoy "  Bliss 
liad  a  little  account  to  scttlo  witli  his  prede- 
cessor, and  he  took  the  opporiunity  to  go  for 
him.  I  need  not  repeat  his  evidence,  as  it  is 
by  this  time  too  well  known.  This  of  course 
brought  the  said  predecessor,  now  Chief  Jus- 
tice of  the  State  of  New  York,  on  llio  stand. 
Now,  Judge  Davis  not  only  wanted  to  be  even 
with  Bliss,  Jayiie  and  Company,  but  he  had 
an  account  more  than  a  year  old  to  settle  with 
Senator  (^onkling,  and  he  did  it  verv  neatly 
indeed. 

Tills  is  in  reality  the  latest  sensation. 
It  may  bo  as  well  to  give  the  precise  words 
of  Judge  Davis  about  the  Conkling  account. 

"  Ue  was  particularly  asked  and  gave  a 
minute  account  concerning  tho  interview 
which  took  place  at  the  Custom  House  bt- tweeu 
liimsolf  and  tho  officers  of  the  customs  in  re- 
lation to  the  coiTipromise  of  the  Phelps,  Dodgo 
&  Co.  ease  on  December  :U.  He  had  given  a 
statement  of  tho  same  interview- yostorda}-. 
omitting,  however,  to  mention  tho  name  of 
ono  person  present  at  that  interview.  He 
was  requested  to  give  the  names  of  all  who 
were  present,  and  he  stated  thorn  as  tho  Col- 
lector, General  Arthur;  the  Naval  Officer, 
Mr.  Laflin;  tho  Surveyor,  A[r.  (.jruoU:  the 
Special  Agent,  Mr.  Jayne,  and  Senator  Conk- 
hng.  As  t » the  latter,  ho  exi)res-?od  his  belief, 
as  lie  had  done  yesterday,  tliat  Mr.  Conkling 
was  there,  not  by  design,  but  by  accident, 
and  that  his  presence  had  no  reference  to  the 
caso.  On  being  pressel,  however,  by  the 
Committee  to  relate  substiintial  y  what  oc- 
curred at  that  interview,  he  gave  the  substance 
of  the  conversation  which  took  place,  and  ; 


which  was  in  reference  to  the  questioTJs 
whetlier  the  decisions  of  tho  courts  were, 
that  in  cases  of  false  entries  the  whole  invoice 
was  forfeited  or  only  the  particular  items 
that  wore  tainted  with  fraud,  and  on  that 
point  Judge  Davis  says  that  Senator  Conkling 
took  the  statute  in  his  hands,  read  it,  and 
gav'O  it  as  his  opinion  that  it  was  beyond  all 
doubt  that  the  whole  invoice  was  forfeited, 
and  recommonded  that  in  the  Phelps,  Dodge 
k  Co.  case  a  suit  fi>r  tho  forfeiture  of  tlie 
entire  invoice  should  be  directed. 

No  sooner  was  this  statement  of  Judge 
Davis  known  when  the  strange  "coincidence" 
of  tho  elder  Weller  upsetting  a  coacli-load  of 
voters  on  tho  precise  spot  indicated  to  him 
the  day  previous  was  on  evcryVjody's  lips  who 
liad  ever  read  "  Pickwick." 

Having  come  down  rather  heavily  on  the 
Senator's  "bow  windows,"  Judge  Davis  in 
the  afternoon  and  at  the  close  very  kindly 
offered  quite  gratis  the  following  eye  liniment 
to  the  Senator  whose  eyes  ho  had  so  hand- 
somely painted  blue : 

At  the  close  of  his  statement  he  referred 
again  to  the  interview  at  tlie  Custom  House, 
at  which  Senator  Conkling  was  present,  and 
said  that  ho  had  not  tho  slightest  idea,  and 
certainly  h;id  no  knowledge  and  no  reason  to 
suppose,  that  Senator  Conkling  was  in  any 
way  cunnectod  with  tho  Phelps,  Dodge  &  Co. 
matter.  He  did  not  wish  to  be  understood  as 
conveying  in  any  degree  tho  remotest  impu- 
tation of  the  kind.  He  wanted  to  exclmic 
that  idea  entirely,  as  he  should  bo  very  sorry 
to  make  a  suggestion  in  regard  to  any  member 
of  either  house  that  might  be  warped  into  tho 
idea  that  ho  wished  to  convey  an  unfavorable 
impression. 

Tlio  worst  of  it  is  that  tho  liniment  smarts. 
Judge  Davis  dragged  in  the  fo'lowing  words: 
He  said  he  did  not  mean  to  imply  anything 
detrimental  to  any  mcmljors  in  '•  either 
house  "  of  being  in  any  way  connected  with 
the  Pholps-Dodgo  caso.  Now,  the  facts  were 
but  too  well  esLablishod  that  Genond  Butler, 
a  member  of  the  House,  was  rather  deeply 
Connected  with  tho  caso.  and  putting  a  grat- 
uitous whitewash  on  liutlor,  ho  only  tho  more 
damaged  Senator  Conkling.  In  the  mean- 
time imagine  the  ire,  the  lofty  wratR  of  the 
great  Barl)o  Itosa  Scniato  •.  The  halls  of  tho 
Senate  will  resound  in  good  time  with  tlie  in- 
dignation of  tho  Senator.  For  three  hours  at 
least  will  tho  otherwise  handsome  features  of 
the  Adonis  of  the  Sen.ite  be  distorted  when 
the  great  speech  on  the  subject  now  being  in- 
vestigated is  delivered  by  him  Yet  tho 
strange  coincldenco  will  remain  a  standing 
marvel. 


AN  EXTRAORDINARY  HISTORY. 


141 


A     CCSTOM    HOUSR     SLANDER     DIS- 
PROVKD. 


\F7cm  the  Nt:w  Yoru  TriuiNE.  March  21,  1874.] 
Since  iho  full  and  satisfactory  explanation 
of  the  conipronuscd  case  of  Phelps,  Dodj<c  & 
Co.,  jfiven  before  the  Ways  and  Means  Coni- 
mitlee  l»y  the  Hon.  W.  K  Dodge,  there  Jmve 
been  charges  that  Phelps,  Dodge  &  Co.  sent 
their  Custom  House  clerk  away,  and  have  kept 
liin)  out  of  sight  since  the  ))egmning  of  their 
troubles  to  prevent  damaging  disclosures 
from  him,  A  Tribune  rejiorter  yesterday  o\)- 
tained  the  following  statement  upon  this  iM)int 
from  D.  W.  James,  of  the  firm  of  J'helps. 
J)(idge  &  Co.  The  gentleman  referred  to,  Mr. 
1'.  X.  Moore,  liad  l)een  the  Custom  House 
clerk  of  the  firm  for  over  twenty  years.  More 
than  a  montli .  Ijefore  Phelps,  Dodge  A  Co 
were  "struck"  by  Jay  no.  Mr.  Moore  had  u 
shock  of  i>uralysis.  Marked  weakness  and 
serious  prostration  followed.  Mr.  Moore  was 
visited  by  one  of  the  mend)crs  of  the  lirm, 
who  also'  conversed  with  Moore's  physieian. 
Tlie  latter  said  that  a  voyage  to  Kun»pe,  or 
some  such  stej),  was  necessary  for  the  patient, 
whose  life  could  not  be  preserved  if  he  shoulU 
remain  here.  The  lung  ami  faithful  service  of 
Mr.  Moore  was  an  api)eal  to  the  house  to  aid 
him,  and  it  was  determined  to  send  him  to 
Europe  at  the  exi^nse  «)f  the  lirm.  Finally, 
l)assage  was  engaged  for  him.selt  and  wife  on 
a  Wednesday  steamer  of  the  Williams  i  (Juioa 
line,  but  on  the  day  when  that  steanier  sailed 
he  was  too  sick  to  be  moved,  and  the  time  of 
departure  was  changed  to  a  Saturday  steamer. 
Before  that  sailed  Jayne  had  opened  tire. 
In  the  course  of  a  consulation  ol  tlie  mem- 
lx.'rs  of  the  tirm,  held  at  the  iiouse  of 
Mr.  Dodge,  the  question  of  sending  away 
the  (Custom  Hou.se  clerk  uiider  these  cir- 
eumstances  was  considered.  It  was  under- 
stood that  his  departure  at  llmt  time 
would  givo  a  pretext  tor  siispicion.  but  the 
mans  life  was  at  stake  (so  said  his  physi- 
cian), and  Mr.  Moore  went  away  as  had  Ijeen 
arranged  He  returned  froin  Kuroin;  last 
Summer,  still  too  feel)le  for  work,  at  least  in 
hot  weather.  Accordingly  he  six-nt  the 
heated  term  at  the  home  of  his  family  in 
Massachusetts,  nearCai)e  Cod.  This  was  tJie 
circumsUmce  on  which  is  Ijased  the  malicious 
statement  that  *•  on  his  return  lie  was  only 
one  day  in  their  office,  when  he  disappeared 
again.'  He  is  now  at  work  for  the  house, 
but  the  effects  of  the  paralytic  shock  still  re- 


I  main,  so  that  lie  is  unable  to  perform  unre- 
I  milting  or  severe  labor.  He  can  1x3  seen  at 
1  their  office  almost  any  day,  and,  consecpiently, 
j  1ms  not  '•  disappeared."  Anticipating  that 
i  Jayne  and  his  crew  would  find  a  luuullo  for 

Ivi'ng  innuendoes  in  the  departure  of  Mr. 
!  Moore,  Phelps,  Dodge  &  (.'o.  procured  and 
i  now  preserve  a  certilicate  from  Moore's  phy- 
:  sician,  showing  tho  immediate  necessity  of  his 

European  journey.* 

Mr.  James  said  that  the  liouse  did  not  care 
'  to  divert  attention  from  the  great  question  of 

the  injustice  of  the  moiety  system,  and  the 
!  wrongs  which  merchants  had  suflerod  under 
\  it,    by   publishing  answers   to   all   the  mean 

flings  and  tiuHing  insinuations  which  might  be 
;  made  by  the  enemies  of  the  firm.  At  tho 
'  same  time  he  declared  that  the  firm  ix)ssessed 
!  full  evidence  in  documents  and  in  figures  t«» 
1  confinn  every  least  statement  which  Mr. 
j  Dodge  had  made. 


TURKEY  AND  THE  UNITED  STATED. 


t  Coiregpoiuience  Washincjton  Capital,  March, 

1874.J 

To  Sahib,  Editor  of  Tiiu  Cai'1T.\l: 

As  I  predicted  in  my  last  letter  to  Tiik 
Capital,  the  most  interesthig  topic  this  week 
here  is  the  Ways  and  Means  Committee  in- 
vestigation on  the  moiety  system  and  seizure 
outrages.  I  natumlly  refrain  to  dwell  on  u 
subject,  I  mean  the  investigation  i)art  of  it,  si» 
much  iKjtter  known  in  Washington,  But 
prominent  in  tlie  great  sea  of  trouble  the  case 
of  Phelps,  Dodge  «fe  Co.  suinds  out  like  some 
gigantic  monument  of  hardship  and  oppres- 
sion, against  which  the  law  of  1«G3  has 
hurled  all  its  fiery  shafts,  "Whether  Mr. 
Jayne  has  only  carried  out  u  bad  law  to  the 
letter  or  not  is  now  by  no  means  the  ques- 
tion, Mr.  Jayne  is  not  on  trial  moro  than  the 
merchants.  iJut  it  would  not  at  all  be  inap- 
propriate to  use  Mr.  Jayno's  very  emphatic 
expression  on  Tuesday  last.  Jt  is  the  infer- 
nal thief,  the  law  of  18G3,  and  its  represen- 
tative, that  is  on  trial.  Now  what  I  am 
alxiut  to  relate  is  not.  to  use  a  Byronic  ex- 
pression, a  poetic  fablo  or  Par.see  anecdote, 
but  simply  tho  truth,  that  can  be  verified. 

Jn  relating  a  case  of  singular  oppression  that 
happened  in  1832,  1  wih  give  names  and 
places,  and  compare  the  siory,  when  com- 
plete, with  that  of  Phelps,  Dodge  L  Co.  J 
respectfully  invite  not  only  members  of  Con- 


♦  Mr.  Moore  has  since  died  from  the  effects  of  this  illness. 


142 


CONGRESS  AND  PHELPS,   DODGE  &  CO. 


g:re3s  in  general,  but  the  members  of  the 
Wiivs  and  Means  Committed  in  particular  to 
give  full  attention  to  my  narrative. 

In  18G4:  I  met  Mr.  Joseph  Comandi,  the 
great  banker  of  Constantinople,  in  Paris.  I 
had  bushiess  relations  with  him  and  became 
quite  intimate.  His  father,  Israel  Comandi, 
who  was  also  a  rich  banker  and  jeweller  to 
tlie  Sultan,  was,  in  1832,  stripped  of  every 
vestage  of  property,  bastinadoed  until  he  be- 
came a  physical  wreck,  and  died  in  exile,  a 
poor,  broken  down  wretch.  The  liistory  of 
the  elder  Comandi's  misfortunes  is  as  fol- 
lows :  Israel  Comandi,  a  wealthy  banker  and 
jeweller  in  Constantinople,  had,  in  1831-2,  a 
young  man  in  his  employ,  born  in  Greece ; 
both  Comandi  and  his  clerk  were  Jews.  The 
young  clerk  proved  very  serviceable  and  in- 
telligent; old  Comandi,  who  was  a  kind  sort 
of  a  man,  made  it  a  rule  to  invite  his  clerks 
who  were  his  co-religionists  to  his  house  dur- 
ing the  Passover  feast  and  on  other  holidays. 
It  was  on  one  of  these  occasions  that  the 
young  Greek  clerk  took  a  liking  to  Comandi's 
third  daughter,  a  girl  of  about  fourteen  or  fif- 
teen, and  actually  asked  the  old  banker  to 
give  her  in  marriage  to  him.  The  rich  banker 
only  laughed  at  such  a  proposal,  and  told  the 
young  man  brusquely  to  attend  to  the  books 
and  jewels.  Prom  that  date  the  rascally 
clerk  brooded  revenge  ;  and  he  soon  found  an 
occasion  to  ca.iry  it  out. 

In  balancing  and  arranging  Comandi's 
books  he  found  that  about  a  year  previous 
Comandi  had  furnished  the  Sultan  (who,  by 
the  bye.  was  the  father  of  the  present  Sultan 
and  of  Abdel  Medjid)  an  aigrette  made  of 
numerous  large  brilliants,  the  cost  of  which 
was  forty  thousand  Turkish  pounds,  or  some 
$200,00U.  He  found  that  Comandi  had  ren- 
dered an  invoice  to  the  grand  vizier  and 
sworn  to  its  correctness,  viz. :  that  the 
aigrette  contained  twelve  brilliants  weighing 
ten  carats  each,  twenty-four  weighing  five 
carats  each,  and  so  on.  That  Comandi  had 
charged  the  twelve  larger  diamonds  so  much 
a  piece  on  the  assumption  of  being  ten  cjirat 
brilliants.  Then  this  villanous  j^oung  rascal 
found  that,  althougli  the  twelve  large  bril 
Hants  weighed  in  the  aggregate  more  than  one 
hundred  and  twenty  carats,  yet  there  were 
some  among  the  lot  that  only  weighed  nine  and 
a  half  airats  and  two  only  weighed  nine  carats 
each.  The  truth  was  Comandi  had  to  matcl 
size  and  color,  and  did  not  bother  his  head 
whether  one  or  two  stones  weighed  less  than 
exactly  ten  carats,  as  long  as  the  whole 
twelve  weighed  one  hundred  and  twenty 
carats.  Having  these  facts  before  lum,  the 
first  thing  the  clerk   did  was   exactly  what 


Harvey  did  at  Phelps.  Dodge  &  Co.'s  forty 
years  later — he  stole  his  master's  papers. 

The  next  thing  he  did  was  not  to  go  to  a 
special  agent,  but  take  the  "Turban:'"  that 
is,  become  a  Mohammedan;  that  was  im- 
portant, and  gave  him  protection  against  a 
Jew,  as  in  those  liappy  days  the  oath  of  a 
Mohammedan  against  a  Jew  was  admissible, 
while  the  testimony  of  a  Jew  against  a  Turk 
was  inadmissible. 

He  then  went  to  his  highness,  the  grand 
vizier,  and  exposed  his  master  of  having 
cheated  the  sublime  porte.  Unfortunately  the 
grand  vizier  owed  Comandi  money,  and  he 
naturally  thought  it  would  be  but  a  fair  way 
to  pay  his  own  debt  by  despoiling  Comandi. 

It  was  in  vain  that  Comandi  pleaded  that 
the  brilliants  that  weighed  more  than  ten 
carats  each  overbalanced  by  far  in  value  the 
shortcomings  of  those  that  only  weighed  nine 
and  a  half  or  nine  carats.  It  was  also  vain 
for  poor  Comandi  to  ask  that  the  twelve 
stones  should  be  wciglied  altogether ;  that 
then  more  than  one  hundred  and  twenty 
carats  would  be  found.  No !  The  wise  grand 
vizier  must  have  been  the  venerable  inventor 
of  the  United  Stcites  customs  law  of  1863. 
He  said  :  '•  You  testified  that  your  invoice  is 
in  every  respect  true.  You  stated  there 
were  twelve  stones  weighing  ten  carats  each, 
and  we  find  three  of  them  weighing,  one  nine 
and  a  half,  and  two  only  nine  carats  each. 
We  have  nothing  to  do  with  those  that  over- 
weigh  ;  the  business  is  with  those  that  under- 
weigh." 

To  make  this  true  narrative  short  suffice  it 
to  say,  Israel  Comandi  was  bastinadoed  on  the 
bare  soles  of  his  feet,  his  whole  vast  fortune, 
houses  and  all,  was  confiscated,  and  the  plun- 
der was  divided  between  the  Sultan's  treas- 
ury and  the  informer.  The  poor  family  was 
driven  into  exile.  Old  Comandi  died  soon 
after  from  the  effects  of  the  bastinado,  and  it 
was  not  until  the  mild  reign  of  Abdel  Medjid 
began  that  the  English  and  French  ambassa- 
dors insisted  on  justice  being  done  tlie  poor 
exiled  family.  This  act  of  restitution,  1  be- 
lieve was  due  to  the  late  Ali  Pasha. 

Enough.  Tlie  Comandis,  particularly  Jo- 
seph, the  eldest  son  of  the  victmi  of  this  aw- 
ful conspiracy,  are  now  rich  and  powerful. 
This  happened  in  Turkey  in  1832. 

Now  turn  to  the  United  States.  In 
1872  the  house  of  Phelps,  Dodge  &  Co.  was 
robbed  of  certain  papers  by  an  informer  in 
their  employ.  These  papers  proved  that  the 
Government  in  five  years  lost  $1,664.  Forth- 
with books  and  papers  were  seized,  and  the 
mild  law  of  1863  confiscated  $2T1,0U0  of  the 
firm's    money.     In    vain    did   these    people 


AN  EXTRAORDINARY  HISTORY. 


143 


plead  that  thoy  overpaid  duties.  Tlie  United 
States  Government,  like  the  grand  vizier,  only 
looked  at  the  underpay. 

True,  Mr,  William  E.  Dodge  was  not  basti 
nadoed  on  tlie  bare  soles  of  his  feet  as  was 
Coraandi.  But  all  the  families  of  the  great 
house  of  Phelps,  Dodge  &  Co.  have  received 
so  many  bastinadoes  in  all  manner  of  shape 
and  ways,  except  with  actual  bamboo  sticks, 
that  it  may  well  be  questioned  whether  Mr. 


Coraandi's  bastinado  was  not  the  more  mer- 
ciful.      • 

I  Avill  pursue  the  simile  no  further.  1  leave 
it  for  the  American  people  to  do,  if  they  can 
do  ao  without  blushing. 

I  remain  your  sincere  friend, 

Adexsey  CuRiosiniiOY. 
Parsee  Merchant  of  Bonibav. 


THE   MERCHANTS   OF  NEW   YORK 
IN   COUNCIL. 


PUBLIC  MEETING,  MARCH  20rH,  1874,  OF  THE  MERCHANTS  OF 
NEW  YORK  IN  PROTEST  AGAINST  THE  PROCEEDINGS  OF 
U.  S.  REVENUE  OFFICIALS. 

On  the  return  from  Washington  of  the  Special  Committee  of  merchants 
and  citizens,  appointed  by  the  New  York  Chamber  of  Commerce  to  repre- 
sent it  in  the  hearing  relative  to  moieties,  seizures  and  revenue  outrages, 
before  the  Committee  of  Ways  and  Means  of  tlic  House  of  Representatives, 
a  special  meeting  of  merchants  was  convened  at  Steinway  Hall,  March 
20th,  to  hear  the  report  of  the  said  Ciiamber  of  Commerce  Committee. 

The  floor  of  the  Hall  was  well  tilled,  and  a  very  large  proportion  of  the 
audience  consisted  of  merchants  and  clerks.  Deep  interest  was  manifested 
in  the  proceedings,  and  every  countenance  on  the  platform  and  on  the 
floor  gave  evidence  that  the  subject  under  consideration  was  one  with 
which  all  were  familiar,  and  to  which  they  had  given  much- and  earnest 
thought.     Among  the  prominent  gentlemen  present  were: 

Cyrus  W,  Field,  William  M.  Vermilye,  Leopold  Bierwerth,  J.  A.  Stevens, 
Jr.,  James  N.  Constable,  S.  B.  Ruggles,  W.  B.  Barbour,  Daniel  C.  Robbins, 
Gustav  Schwab,  A.  A.  Low,  L.  E.  Chittenden,  Morris  K.  Jessu]),  E.  C. 
Codwin,  E.  F.  Shepard,  George  H.  Lane,  S.  B.  Chittenden,  Joseph  Seligman, 
William  H.  Fogg,  Jackson  S.  Schultz,  Ambrose  Snow,  Samuel  Sloan,  Joseph 
Choate,  Oliver  Hoyt,  Jonathan  Sturges,  Theodore  Rosevelt,  Jas.  S.  T. 
Stranahan,  Charles  E.  Beebee,  Charles  T,  Landon,  William  Watson,  James 
M.  Rosevelt,  J.  P.  Wetherill,  William  J.  Peake,  John  H.  Hall,  E.  Obeler- 
man,  E.  (Jreefl",  A.  Schlesinger,  Adolph  Rusch,  Henry  Winsor,  Joseph  Grubb, 
Charles  Mali,  Henry  Sanger,  E.  llartt,  E.  Luckmex  er,  James  S.  Harding. 

^ilessrs.  Henry  Winsor,  Joseph  Grubb,  J.  P.  Wetherill  and  James  S. 
Harding  represented  the  Philadelphia  Board  of  Trade. 

The  loUowing  further  report  of  the  proceedings  of  this  meeting  are 
copied  from  the  columns  of  the  New  York-  Tribune  of  March  21,  1874: 

The  meeting  was  called  to  order  at  eight  P.  M.  by  George  Opdyke,  the; 
First  Vice-President  of  the  Chamber  of  Coninierce.  He  briefly  stated  the 
object  for  which  the  meeting  had  been  callcv:!,  and  introduced  John  Austin 


AN  EXTRAORDINARY  HISTORY.  145 

Stevens,  who  read  the  report  of  the  Special  Committee  of  the  Chamber  of 
Commerce,  the  resolution  proposed  for  the  consideration  of  the  meeting, 
and  the  amended  Revenue  Law  proposed  by  the  Joint  Committees  from  the 
New  York,  Boston  and  Philadelphia  Chambers  of  Commerce  for  presentation 
to  Conjijress.     The  resolution  was  unanimously  adopted. 

The  Chairman  then  introduced  Joseph  H.  Choate  as  an  eminent  lawyer, 
who,  in  his  professional  practice,  had  had  opportunities  of  seeing  some  of 
the  evils  of  which  the  merchants  complained.  His  close,  incisive  arguments 
were  listened  to  with  fixed  attention,  and  the  speaker  was  interrupted  with 
frequent  and  loud  applause.  His  references  to  the  "  means  of  extortion 
which  have  been  placed  in  the  hands  of  corrupt  Custom  House  officials  and 
more  corrupt  informers,"  and  his  advice  to  the  merchants  to  refuse  to  com- 
promise, and  to  demand  a  trial  by  jury  met  with  a  prompt  response.  He 
argued  strongly  against  the  moiety  system,  by  which  the  plunder  taken 
from  the  merchants  was  divided  not  only  between  the  Government  and 
the  Custom  House  officers,  but  so  that  a  part  found  its  way  into  the 
pockets  of  members  of  Congress,  and,  hence,  shut  ofif  redress  from  the  mer- 
chant, who  might  appeal  to  the  Secretary  of  the  Treasury.  He  demanded 
that  the  law  giving  the  right  of  search  and  seizure  of  private  papers  be 
stricken  from  the  Statute  Book,  and  that  nothing  be  put  in  its  place.  In 
England  a  man's  house,  he  said,  is  his  castle,  into  which  the  king  cannot 
enter.  If  that  was  a  good  law  in  England  before  the  American  Revolution, 
it  is  good  law  for  free  America. 

Thomas  Barbour,  the  story  of  whose  wrongs  and  of  whose  bold  fight 
against  wrongs  has  been  told  in  The  Tribune,  was  next  introduced.  Re- 
ferring to  that  statement,  as  published,  he  said  that  it  was  true — every 
word  of  it — and  he  could  prove  it. 

The  Chairman  then  introduced  the  Chairman  of  the  Committee  on  Revenue 
Reform,  "  whose  courage  and  ability  had  done  much  to  create  the  feeling 
which  pervaded  the  community  on  this  subject."  Jackson  S.  Schultz  was 
received  with  tremendous  applause,  and  his  address  was  interrupted  by 
frequent  tokens  of  enthusiastic  approval.  Tne  words  fell  hot  from  his  lips, 
and  the  language  in  which  he  denounced  the  "  hounds  of  the  Custom 
House,"  and  their  confederates  in  Congress,  was  not  chosen  for  its  inoffen- 
sive character.  As  he  spoke  of  "Butler,  that  honest  gentleman,"  groans 
and  hisses  were  heard  ii\  all  parts  of  the  house.  He  had  been  attending  so 
much  to  other  people's  business  recently,  he  said,  and  had  been  acting  the 
spy  himself  so  much  that  he  was  able  to  tell  more  about  the  affairs  of  some 
merchants  than  they  knew  themselves.  His  explanation  of  the  reason  for 
Mr.  Claflin's  satisfaction  with  the  Custom  House  management  was  received 
with  laughter.     Mr.  Barbour,  who  had  "  more  courage  and  backbone  than 

10 


146  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

any  other  man  within  his  knowledge,"  had  fought  the  Custom  House  and 
beaten  it,  and  yet  advised  all  merchants  so  situated  to  settle.  If  Mr.  Dodge 
were  present  he  would  probably  advise  to  fight  and  not  to  settle.  Which- 
ever course  a  man  takes  when  he  is  undergoing  "  the  squeezing  process," 
he  will  be  so  hardly  used  that  he  will  think  any  other  course  would  have 
been  better.  Mr.  Schultz  resumed  his  seat  amid  stamping  of  feet  and 
cheers. 

S.  B.  Chittenden  spoke  vigorously  for  a  few  moments.  The  only  remedy, 
he  thought,  was  to  divorce  revenue  appointments  from  politics.  Joseph  C. 
Grubb,  of  Philadelphia,  followed.  He  considered  the  moiety  system  one  of 
unmitigated  plunder.  John  P.  Wetherill,  of  Philadelphia,  Mr.  Dinsmore, 
and  others  made  brief  addresses.     The  meeting  closed  about  eleven  P.  M. 


COMMENTS   OF  THE   PRESS, 

{Continued.) 


PAY  BACK  THE  MONEY. 

{Chicago  Tribune,  March,  1874.] 
*'  Send  back-  the  money, ''^  cried  William  Lloyd 
Garrison  tx)  Daniel  U'Connell  and  Ireland, 
when  lie  discovered  that  Maryland  slavehold- 
ers had  lx)en  contributing  to  the  Ilepeal  Fund, 
with  the  evident  intent  of  stopping  O'Con- 
nell's  mouth  from  uttering  denunciations 
against  their  peculiar  customs,  which  he  had 
branded  manstealing.  "Send  Ixick  the  money," 
he  reiterated,  until  nho  Green  Isle  listened  to 
the  demand.  If  that  requisition  was  well  put — 
and  the  moral  sense  of  the  world  commended 
it  when  it  was  a  matter  simply  Ixjtwoen  man 
and  man,  to  be  gauged  by  the  state  of  the  in- 
dividual conscience — how  much  more  so 
when  it  porUuns  to  the  honor  of  a  nation  and 
to  the  requirements  of  public  justice  in  the 
treatment  of  the  Government  towards  its 
subjects  If  money  be  obtained  by  fraud,  by 
blackmailing,  by  conspiracy,  by  one  man  from 
another,  there  is  a  remetiy  in  the  courts. 
There  is  no  r«\sonable  doubt  that  if  a  respect- 
able lirm  in  Chicago  had  been  treated  by  any 
ring  of  unofficial  persons  as  the  firm  of  PJielps, 
Dodge  &  Co.  have  teen  treated  by  (Govern- 
ment agents,  just  as  surely  as  justice  could  Ix; 
done  in  the  courts  of  Chictigo  the  perpetrators 
would  be  doing  th^  State  some  creditiihle  ser- 
vice in  the  Penitentiary  at  Joliet,  instead  of 
being  examined  by  a  Committee  of  Ways  and 
Means  at  Springtield. 

Paying  back  tho  money  is  the  only  way  the 
Government  of  the  United  States  can  do  justice 
to  a  firm  that  it  has  outrageously  swindled, 
and  save  itself  from  the  just  imputation  of  a 
partnership  with  pirates.  Plow  this  swindling 
and  blackmailing  has  been  done,  and  what  are 
the  links  of  the  partnership,  has  l)een  often 
told  i!i  The  Thibuke  and  many  other  papers 
of  the  land,  and  is  being  told  day  by  day  tx)  a 
Committee  examining  into  the  operation  of  the 
law,  and  the  action  of  the  conspirators  work- 
ing under  it.  Before  this  Committee  finish 
their  work,  let  them  examine  ex-SecreUiry 
Boutwell,  and  ascertain  what  he  knew  of  the 


transaction  at  the  time  the  thumb-screw  was 
adjusted  to  these  merchants.  Did  he,  or  did 
he  not,  know  that  their  offence  was  merely 
technical?  Was  he  then  construing  the  law 
as  a  just  arbiter  or  as  a  political  ally  of  Ben- 
jamin Butler? 

Pay  back  the  money  not  only  to  Phelps. 
Dodge  &  (Jo.,  but  to  a  number  of  other  re- 
spectable firms  who  have  lx»en  roblxjd  by  the 
&une  gang  of  conspirators.  Purge  out  the 
bloo<l-money  from  the  Public  Treasury,  which 
seems  to  have  become  like  the  House  of  (}od 
in  old  Jerusalem,  a  den  of  thieves.  Pay  back 
the  money!  Let  the  public  press  demand 
this,  and  the  people  echo  it,  till,  as  in  tho  sal- 
ary grab.  Congress  be  driven  to  do  this  act  of 
simple  justice.  It  may  be  that,  as  the  politi- 
cal representatives  have  done  every  possible 
dishonorable  thing  to  keep  up  the  i)arty,  they 
may  consent  to  do  an  honorable  thing  to  save 
it.     Pay  back  the  money  I 


{From  Vie  Albany  Argus,  March  34,  1874.] 
The  roblKjry  of  Phelps,  Dodge  k  Co.  derives 
imporUince  mainly  from  the  illustration  it  af- 
fords of  the  manner  in  which  the  Federal 
Government  treats  honest  and  honorable  citi- 
zens. The  case  illustrates  in  striking  outline 
an  obnoxious  law  and  its  odious  enforcement, 
revealing  at  once  the  oppression  which  the 
statute  permits,  and  the  arbitrary  des[X)tism  of 
the  Administration,  which  d<^s  not  scruple  to 
avail  itself  of  tho  advantages  for  extortion  af- 
forded by  the  law. 


SECRET    HISTORY    OP    THE    PHELPS- 
DODGE  CASE. 

[From  the  Chicago  Tribune,  March  27,  1874.] 
The  testimony  of  Judge  Noah  Davis  before 
the  Ways  and  Means  Committee  gives  the 
pubhc,  for  the  first  tinie,  an  insight  into  the 
way  in  which  one  of  our  most  famous  firms, 
composed  of  men  who  have  done  more  for 
their  country  than  the  whole  tribe  who  black- 


148 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


mailed  them,  came  near  being  made  our  most 
infamous  linn.  Busiucss  men  should  read, 
mark,  and  inwardly  digest  the  remarkable 
story.  They  can  then  decide  whether  or  not 
they  care  to  nni  the  risk  ol"  being  treated  in 
the  same  way  themselves. 

The  law  requires  that  invoices  of  imported 
goods  shall  contain  thy  cost  and  all  tlie  ex- 
penses of  transportation.  The  latter  proviso 
uicludes,  of  course,  the  expenses  from  the 
place  where  they  were  bought  to  the  port 
whence  tliey  are  shipped.  Tlie  invoice  must 
be  verified  by  our  Consul  in  the  city  where 
the  goods  are  manufactured.  Some  of  the  in- 
voices of  the  sheet  tin  imported  by  PJielps, 
Dodge  &  Co.  v/ere  verified  by  our  Consul  in 
Liverpool  (in  violation  of  law,  since  no  tin  is 
manufactured  in  that  city),  and  did  not  con- 
tam  the  cost  of  transportation  from  the  place 
of  manufacture  to  Liverpool.  The  error,  on 
some  millions  of  dollars'  worth  of  imports,  in- 
volved a  loss  to  the  Government  of  .'i;i,6UU.  It 
was  discovered  through  a  clerk  who  had  been 
rlischarged  from  the  firm's  employ.  At  the  re- 
quest of  the  Custom  House  authorities.  Judge 
Uavis,  who  was  then  United  States  District 
Attorney  of  Kaw  York,  examined  the  state- 
ment laid  before  him  by  Jayne,  and  gave  his 
opinion  that  the  case  ought  to  be  examined. 
Jayne  then  took  the  books  and  papers  of  the 
firm.  Dec.  3U,  1872,  George  Bhss,  Jr.,  was  se- 
cretly sworn  in  as  Davis'  successor.  On  the 
same  day  Davis,  ignorant  that  he  was  really  out 
of  office,  was  asked  to  attend  a  consultation  at 
the  Astor  House  between  Jayne  and  the 
Phelps-Dodge  coiuisel.  The  latter  offered  to 
pay  ^15U,UU0  for  a  settlement  in  full.  This 
was  declined.  Jayne  then  stated  that  the  arti- 
cles actually  affected  by  the  error  in  the  in- 
voices were  worth  $26u,00U.  On  the  evening 
of  Dec.  30,  the  firm  agreed  to  pay  this  amount. 
They  had  previously  appealed  to  Boutwell  to 
save  them  from  being  blackmailed,  and  had  re- 
ceived from  that  sapient  statesman  the  reply 
that  he  would  uo  nothing  for  them,  because  lie 
regarded  the  interest  of  the  Government  and  an 
importer  as  directly  antagonistic,  and  thought 
that  each  ought  to  try  to  get  all  that  was  pos- 
sible out  of  the  other!  An  appeal  to  Grant 
got  no  response.  To  be  sure,  it  had  been 
urged  in  favor  of  his  reelection  that  the  finan- 
cial interests  of  the  country  demanded  it,  and 
Phelps,  Dodge  &  Co.  had  contributed  $20,000 
to  get  iiim  reelected,  but  lie  was  safe  for  four 
years  more,  and  the  dupes  must  take  care  of 
themselves.  So  they  yielded  perforce.  They 
could  not  fight  longer.  Their  name  was  un- 
der a  cloud.  Their  trade  was  crippled.  Even 
in  far  off  Singapore  the  charges  against  them 
had  gained  credence.  On  the  morning  of  Dec. 


.•n.  Judge  Davis,  still  ignorant  that  Bliss  had 
stolen  into  liis  place,  met  the  latter,  told  him 
that  ho  was  about  to  close  up  the  Phelps- 
Dodge  case  that  morning,  and  offered  him 
half  the  fees,  inasmuch  as  his  official  term 
would  begin  the  next  day.  Bliss,  moved  by 
this  generosity,  blurted  out  the  information 
that  Davis  had  been  duped.  "  I  was  told  last 
night  what  took  place  at  the  Astor  House,'' 
said  he,  "and  I  was  at  the  Collector's  house 
till  a  late  hour,  and  I  know^  it  is  not  to  be  set- 
tled to-day."  So  there  had  been  a  secret 
meeting  of  the  rogues  to  see  whether  they 
could  not  give  the  screw  another  turn  and 
squeeze  more  l)lackmail  out  of  their  victims. 
Davis  went  to  the  Custom  House  and  found 
there  the  Collector,  Surveyor,  Naval  Officer, 
and  Jayne.  The  buzzards  had  gathered  over 
their  prey.  They  questioned  Davis  about  the 
law  in  the  case,  and  he  answered  them,  taking 
care  to  state  at  the  outset  that  he  would  now 
accept  no  fees  in  the  matter  in  any  event.  He 
told  them  no  jury,  unless  especially  advised 
by  a  judge,  would  give  them  a  verdict.  He 
afterwards  advised  Mr.  Dodge  to  fight  the  case 
to  the  end.  The  cost  of  contest  was  too  heavy, 
however.  It  was  cheaper  to  submit  to  being 
swindled.  The  firm  paid  $271,000  as  a  pen- 
alty for  their  English  agent's  ignorance  of  a 
technicality  in  our  complex  revenue  laws — 
an  ignorance  that  had  cost  the  Government 
responsible  for  the  complexity  about  $1,G00. 
A  few  days  ago  Mr.  Dodge,  when  he  testified 
before  the  Waj's  and  Means  Committee,  al- 
most lost  control  of  himself  when  he  told  how 
a  reputation  gained  by  half  a  century's  honest 
work  had  been  dragged  through  the  mire  by 
Jayne  and  his  gang.  This  spectacle  of  an  old 
man  crying  over  the  irremediable  wrong  his 
Government  had  done  him  is  not  one  to  be 
proud  of.  Nor  is  the  spectacle  of  the  Treasury 
dividing  the  swag  with  the  blackmailers  a 
pleasant  one.  Phelps,  Dodge  &  Co.,  are  a 
shrewd  firm,  but  they  can  scarcely  consider 
their  investment  of  $20,000  in  Grant's  re- 
election, for  the  sake  of  protecting  the 
country's  commercial  interests,  a  paying 
speculation. 


WHY  DID  THEY  COMPKOMISE  ? 

[From  the  New  Yokk  Tribune,  March  28, 1874.] 

It  long  ago  became  evident  that  the  case 
of  Phelps,  Dodge  &  Co.  was  to  go  on  record 
as  a  cav^e  cekhre  in  our  mercantile  and  finan- 
cial history,  and  yet,  notwithstanding  all 
that  has  been  said  and  written  upon  the 
subject,  it  is  certain  that,  except  for  the 
lacts  that  have  been  dragged  to  light  within 


AN  EXTRAORDINARY  HISTORY. 


149 


the  last  few  weeks,  it  would  liave  been  very 
difficult,  if  not  wholly  impossible,  for  the  pub- 
lic to  form  any  clear  conception  of  its  history 
and  national  importance.  The  circumstance 
that  the  great  firm  compromised  and  settled 
has  been  with  many  a  stumbling  block,  inas- 
much as  it  almost  necessarily  t?cemed  tx)  im- 
ply either  a  want  of  pluck  on  the  one  hand 
or  else  a  lack  of  a  full  consciousness  of  in- 
nocence or  absence  of  fraudulent  intent  on 
the  other.  It  is,  therefore,  to  this  very 
point,  viewed  in  the  light  of  the  new  evi- 
dence, that  we  now  propose  to  ask  special 
attention  ;  and  we  are  very  much  mistaken  if 
this  part  of  the  history,  hitherto  obscured  or 
concealed,  does  not,  when  fully  imderstood, 
constitute  a  ciiuse  of  offence  against  the 
Government  and  all  concerned  in  the  pro.se- 
cution,  which  the  great  general  public  will  [ 
not  Ix?  quick  either  to  forget  or  forgive. 

It  will  be  remembered  that  the  dishonest 
clerk,  whose  sense  of  patriotic  obligation, 
80  highly  extolled  by  Jayne,  did  not  develop 
except  under  the  prospect  of  large  i)ecuniar^ 
gains,  took  first  his  stolen  papers  to  a  law 
firm  of  this  city  of  considerable  repute  and 
standing,  but  not  concerned  in  Custom  House 
or  revenue  business.  The  case  as  presented 
to  them  was  not  one  of  a  client  seekitig  pro- 
tection of  the  law  against  oppression,  of 
wrongs  committed,  property  tiiken,  character 
as.sailed  or  jKjrson  injured  and  redress  denied ; 
but  a  shameless  open  proffer  on  the  part  of 
a  penniless  adventurer  to  share  an  oppor- 
tunity for  enrichment  contingent  on  a  vio- 
lated trust,  on  condition  of  legal  cotiporation 
and  assistiince.  By  this  firm  the  case  was 
worked  up  at  the  beginning. 

The  next  step  was  to  communicate  with 
B.  U.  Jayno;  and  although  Mr.  Jayne  con- 
fessed before  the  Committee  of  Ways  and 
Means  that  he  knew  the  papers  on  which 
the  case  rested  were  stolen,  yet  he  knew  also 
that  the  placer  to  be  worked  was  rich,  the 
nuggets  great  in  prospective,  and  this  for 
him  was  all  sufficient. 

For  all  ordinary  cases,  Mr.  Jayne  has  un- 
doubtedly full  confidence  in  Ins  own  capaci- 
ties ;  but  in  a  case  promismg  such  unlimited 
plunder  as  this,  ordinary  instrumentalities 
could  not  l^e  relied  on.  He  accordingly  looks 
about  for  a  partner,  and  from  the  whole 
country  selects  the  most  crafty,  the  mo.st  un- 
scrupulous, and,  from  a  jjolitical  point  of 
view,  the  most  influential  with  the  President 
and  the  SecreUiry  of  the  Treasury,  in  the 
person  of  General  Butler.  The  ring  thus 
formed  is  next  enlarged  by  the  necessary  in- 
clusion, as  participants  of  the  spoils,  of  the 
Collector,   Naval  Officer   and    Surveyor,  and 


later  by  the  addition  of  the  new  District 
Attorney,  George  Bliss,  whom  a  vision  of 
two  per  cent,  on  one  million  seven  hundred 
thousand  dollars  was  enough  to  tempt  to 
tireless  exertion. 

One  would  think  that  here  was  an  array 
of  agencies  and  instrumentalities,  in  the  form 
of  lawyers,  liigh  officials  and  detectives, 
amply  sufficient  to  manage  any  case  so  mons- 
trous, and  yet  so  clear  and  paljjable  as  this 
of  riielps.  Dodge  &  Co.  was  claimed  to  be. 
But  Judge  Noah  Davis,  in  his  recent  testi- 
mony, has  lifted  a  curtain  behind  which  not 
a  few  had  previously  thought  that  they  saw 
significant  figures  dimly  walking,  and  shows 
us  a  Senator  of  the  United  States,  the  sfKJcial 
representative  of  the  commercial  emixjrium 
of  the  country,  cheek  by  jowl  at  a  night 
session  with  a  detective,  statute  in  hand,  de- 
claring that,  as  it  was  nominated  in  the 
bond,  the  pound  of  flesh  could  bo  lawfully 
tjiken.  And  if  the  curtain  had  been  lifted  a 
little  higher  the  figure  of  another  Senator  of 
the  I'^nited  States  would  also  doubtless  have 
appeared,  giving  judgment  to  the  same  effect, 
and  adding  his  infiuenco  to  the  agencies  al- 
ready enlisted  to  work  the  ruin  and  disgrace 
of  one  of  the  foremost  mercantile  houses  of 
the  country ;  and  all  for  a  motive  which  in 
the  case  of  every  one  concerned,  except 
Jayne.  whoso  deeds  it  was  to  be  expected 
would  fully  accord  with  his  profession,  em- 
bodied the  veri'  essence  of  all  that  was  mean 
and  contemptible.  For,  turn  it  and  twist  it 
as  we  may.  the  offence  of  Phelp.s,  Dodge  A 
Co..  as  the  result  of  examination  and  re- 
examination, and  by  the  confession  and  affi- 
davit of  the  chief  (Jovernment  officials, 
comes  down  to  an  alleged  loss  to  the  cus- 
toms of  $I,G58 — the  utmost  possible  gain  to 
the  firm  bciug  at  the  same  time  nieasured 
by  the  relation  which  this  sum  in  the  gross 
stands  to  a  payment  of  ten  millions  in  duties, 
or  a.s  a  percentage  of  advanUigo  over  the 
rest  of  the  trade  in  n  five  years'  import  of 
over  forty  millions.  And  this  fact  being 
known  at  the  time  of  the  night  Senatorial 
conferenc-e  and  before  the  settlement  and 
compromise  fully  as  well  as  it  is  known  now, 
we  are  of  necessity  driven  to  the  conclusion 
that  the  motive  which  induced  Senators  and 
Representatives  of  the  United  Suites.  District 
Attorneys,  independent  but  influential  attor- 
neys and  detectives,  to  manifest  such  unusual 
energy,  and  to  act  so  differently  from  what 
they  do  when  Peter  Schmidt  or  John  Jones 
is  accused  of  defrauding  the  revenue  of  many 
times  sixteen  hundred  dollars,  was  simply 
and  nakedly  the  desire  for  plunder.  It  was 
nothing  to  the  people  who  lived  in  the  coun- 


150 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


try  of  Gadarenes  that  one  of  their  own  citi- 
/-ens  liad  been  reclaimed  from  Imiacy  and  made 
A  hoalUif  ul  niomber  of  society,  so  long  as  the 
value  of  the  hogs  was  imperilled.  It  was 
nothing  to  lioscoeConkling,  Matt  Carpenter,  B. 
F.Butler,  Geo.  Bliss, and  tlie  official  represent- 
atives of  the  customs  that  the  fair  lame  of 
the  great  mercantile  interest  of  New  York 
was  sought  to  be  struck  down  and  aspersed 
through  their  foremost  representative  for  an 
offence  which  ever}-  other  civilized  nation 
would  luive  held  trivial,  so  long  as  there  was 
a  prospect  of  grahlnng  and  dividing  one  mil- 
lion seven  hundred  and  twenty-six  thousand 
dollars. 

To  contend  manfully  against  foes  where 
there  is  even  a  small  chance  of  success  is 
to  show  pluck  ;  but  to  undertake  to  fight 
when  the  odds  are  entirely  adverse  is  not 
pluck,  but  foolhardiness.  And  with  such 
motives  actuating  such  elements  as  were  ar- 
rayed against  them,  Phelps,  Dodge  &  Co.  may 
well  be  pardoned  if  ihay  hesitated  about 
fighting. 

It  would  have  seemed  the  proper  and  manly 
part  of  men  worthy  to  till  the  high  offices  of 
Secretary  of  the  Treasury,  ISenator  and  lle- 
prescntative  in  Congress  and  District  Attor- 
ney, when  the  triviality  of  the  offence  of 
Phelps,  Dod  e  &  Co. — irrespective  of  the  ques- 
tion of  motive — was  established,  to  fall  back 
on  that  old  legal  but  righteous  maxim,  "  Ne 
lex  curat  minimis,''^  or  that  clause  in  the 
Constitution  of  the  United  States  which  pro- 
vides that  "  excessive  fines  shall  not  he  im- 
posed, or  cruel  and  unusual  punisltonents  in- 
flicted,'''' and  to  say,  "  This  is  too  small  a 
"matter  for  a  great  Government  to  make 
"  much  of.  If  duties  in  trifling  amount  have, 
"under  doubtful  circumstances,  been  with- 
"lield,  let  them  be  returned,  with  sufficient 
"  of  addition  to  serve  as  a  warning  against 
"future  irregularities.  In  these  days  of  de- 
•'■  dining  commerce  let  us  deal  tenderly  with 
"the  reputation  of  American  merchants." 
But  under  the  present  rule  of  politicians  and 


small  men  in  high  places,  such  was  not,  and 
for  the  immediate  future,  wo  have  every 
reason  to  believe,  such  will  not  be  the  policy. 
On  the  contrary,  the  word  has  gone  out  that, 
in  the  debate  contingent  on  the  introduction 
into  Congress  of  the  Inll  affecting  moieties 
and  the  Sanborn  contracts,  certain  prominent 
members  are  to  do  tlieir  best  to  make  good 
Jayne's  assertion  that  "  New  York  mer- 
chants are  a  set  of  infernal  thieves,"  and 
that  special  efforts  arc  to  be  made  to  disgrace 
the  great  firm  that  has  been  imprudently 
restive  under  the  robbery  to  which  they  have 
been  subjected.  Such  an  arraignment,  how- 
ever, from  paid  attorneys,  will  be  subjected 
by  the  people  to  a  very  heavy  discount. 


[From  the  Baltimore  Presbyterian,  March  17, 

1874.] 

Wm.  E.  Dodge,  of  the  firm  of  Phelps, 
Dodge  &  Co.,  appeared  before  the  Committee 
of  Ways  and  Means  a  few  days  since  and 
gttve  a  history  of  the  case  in  which  they  had 
paid  a  large  sum  as  a  compromise,  showing 
the  manner  in  which  the  firm  had  been 
treated.  His  statements  made  a  deep  impres- 
sion, and  there  was  scarcely  any  dissent  from 
the  opinion  that  the  treatment  of  the  firm  had 
been  wholly  unjustifiable.  The  Committee 
was,  it  is  said,  thoroughly  satisfied  that  the 
representations  made  to  the  Treasury  by 
Jayne  and  his  confederates,  and  upon  which 
the  department  acted,  were  false.  The  friends 
of  Mr.  Dodge,  and  they  are  legion,  whose 
faith  in  his  integrity  was  unshaken,  even 
when  tlie  testimony  against  him  was  strongest, 
will  rejoice  at  his  vindication.  His  firm  suf- 
fered to  the  amount  of  nearly  $300,000,  of 
which  $65,000  weni  to  one  person,  the  chief 
informer  against  them.  We  cannot  but  l)e- 
licve  that  further  investigation  will  make 
plain  the  duty  of  Congress  to  vote  the  firm  of 
Phelps,  Dodge  &  Co.,  a  sum  equal  to  that  they 
have  lost. 


ANNUAL  DINNEll  OF  THE  NEW  YORK  CHAMBER  OF 

COMMERCE. 


[From  the  N.  Y.  Tribune,  May  8,  1874.] 

Tlic  one  hundred  and  sixth  annual  banquet  of  the  New  York  Chamber 
of  Commerce  was  enjoyed  at  Dclmonico's,  at  Fourteenth  street  and  Fifth 
avenue,  last  evening.  The  celebration  was  befitting  the  dignity  and 
venerable  eminence  of  this  high  body.  An  experience  very  extended,  re- 
sources the  most  ample,  and  a  char^^cter  which  brings  a  ready  acceptance 
of  invitations  to  distinguished  guests,  make  the  anniversary  festivities  of 
the  Chamber  of  Commerce  notable  in  every  way.  In  the  number  present 
last  evening  there  was  a  little  falling  ofif  from  that  of  some  previous  years, 
and  several  empty  seats  were  noticed  at  the  sumptuous  tables.  But  in 
the  position  and  good  name  of  the  guests  and  members  present  there  was 
u  brave  array.  At  the  centre  of  the  raised  table  on  the  upper  side  of  the 
hall  was  the  Hon.  William  E.  Dodge,  the  President.  Upon  his  right  there 
were  the  Hon.  Henry  Wilson,  the  Hon.  Wm.  M.  Evarts,  Judge  Noah  Davis, 
the  Rev.  Dr.  William  Adams,  Samuel  B.  Kugglcs,  A.  A.  Low,  David  M, 
Stone,  Judge  John  R.  Brady,  Jno.  B.  Bouton,  Whitelaw  Reid,  the  Rev.  Dr. 
A.  P.  Putnam. 

On  the  left  were  the  Hon.  William  F.  Havemeyer,  the  Rev.  Dr.  Jolin  Hall, 
Professor  Roswell  D.  Hitchcock,  Peter  Cooper,  the  Rev.  Dr.  Theo.  L.  Culyer, 
the  Hon.  Fernando  Wood,  the  Hon.  James  W.  Husted,  the  Hon.  Erastus 
Brooks,  the  Hon.  Henry  E.  Davies,  the  Hon.  John  C.  Robinson,  the  Hon. 
John  A.  King,  and  the  Hon.  S.  S.  Cox. 

The  responses  to  the  toasts  given  were  of  marked  interest,  and  fixed  strict 
attention,  though  some  of  them  were  of  extreme  length.  The  gravity  of 
the  staid  assembly  was  changed  to  enthusiasm  by  several  references  to 
matters  of  especial  interest.  Mention  of  the  system  of  arbitration  in  com- 
mercial disputes,  and  of  the  appointment  of  Ex-Judge  Fancher  as  arbitrator, 
was  cordially  applauded.  References  by  Mr.  Dodge  and  Mr.  Evarts  to  the 
evils  of  the  moiety  and  seizure  system  in  revenue  cases,  and  to  the  pros- 
pect of  relief  with  Judge  Davis's  emphatic  condemnation  of  the  system 
were  heartily  approved. 


152  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

The  following  is  an  extract  from  the  speech  of  Judge  Davis,  in  response 
to  the  toast,  "  The  State  of  Neiv  York:" 

You  have  alluded,  Mr.  President,  to  the  case  of  your  own  house.  There 
is  an  old  saying  among  lawyers  that  hard  cases  make  bad  laws.  That  is 
true  of  the  decisions  of  courts.  Put  in  practical  life,  hard  cases  make  good 
laws,  for  they  arouse  the  attention  of  the  community  to  evil  laws,  and 
compel  their  abrogation.  The  blood  of  the  martyr  is  the  seed  of  the 
Church  !  Not  unfortunate  will  it  prove  if  the  seed  from  which  springs  re- 
generated laws  shall  be  found  to  have  been  poured  out  in  the  blood  taken 
'rom  your  veins.  Denounced  as  I  have  been  for  having  certified,  solely 
through  a  sense  of  justice,  that  while  doing  acts  which  were  clearly  viola- 
tions of  the  law,  and  thus  subjecting  you  to  heavy  penalties,  j'ou  and  your 
house  were  free,  in  my  opinion,  from  all  intention  of  defrauding  the  Gov- 
ernment. I  still  hold  to  that  opinion  as  the  exact  demand  of  truth  and 
justice  toward  yourself.  I  have  never,  on  any  occasion  or  under  any  cir- 
cumstances, expressed  any  contrary  opinion.  There  was  no  occasion  for 
doing  so;  for  where  an  act  forbidden  by  the  statute  is  knowingly  done, 
though  in  ignorance  of  the  law,  and  even  in  supposed  compliance  with  it, 
if  a  loss  of  duties  is  the  result,  the  question  of  actual  intent  to  defraud  is 
not  important,  in  a  legal  sense,  until  the  case,  after  judgment,  reaches  the 
Secretary  of  the  Treasury  on  application  for  remission — which  he  is  only 
permitted  to  grant  where  "  intentional  fraud"  or  ''wilful  negligence"  have 
not  occurred.  Not  to  have  written  you  as  I  did,  with  the  views  I  had  of 
the  law  and  the  facts,  would  have  been  unmanly  and  dishonorable.  Pardon 
this  personal  digression.  The  bill  reported  by  the  Ways  and  Means  is  a 
long  advance  toward  good  legislation,  and  should  meet  the  encouragement 
of  this  Chamber.  Whatever  aids  commerce  touches  closely  the  heait  of 
our  State  and  City.  Our  City  is  the  creature  and  very  child  of  commerce. 
Here  is  tbe  gateway  through  which  the  wealth  and  strength  of  the  Old 
World  are  marching  into  the  New.  Give  to  its  vast  and  cosmopolitan 
mercantile  interests  perfect  freedom  from  the  gyves  and  fetters  of  unjust 
laws,  and  it  will  surely  attain  unbounded  prosperity. 

.Mr.  Dodge  then  said  :  The  allusion  in  the  speech  of  Judge  Davis  to  the 
case  of  my  house  may  cause  you  to  pardon  a  simple  remark  which  other- 
wise might  be  out  of  place.  You  may  have  noticed  in  a  letter  printed  in 
The  Evening  Post  of  last  evening  an  insinuation  that  Judge  Davis  wrote  a 
certain  letter  with  a  view  to  compensation.  It  is  barely  doing  him  justice 
to  say  here  that  not  one  cent  was  offered  or  paid  to  Judge  Davis,  and  he 
would  scorn  to  receive  it. 


COMMENTS   OF  THE  PRESS. 


A   SLANDER  CONSIDERKD. 

[Frcm  Harper's  Weekly,  May  9,  1874.] 
The  character  of  the  judges  uix)n  the  bench 
is  a  matter  of  rucIj  vital  importance  to  the 
pubhc  welfare  that  it  is  an  urgent  duty  of 
the  press  to  scan  it  closely,  and  when  it  is 
unjustly  assailed,  to  defend  and  protect  it.  It 
is  a  kind  of  treachery  to  the  highest  public 
interest  to  s\ifTer  in  silence  assaults  upon  the 
honor  of  magistrates;  and  the  pi.blic  is  apt 
to  believe  charges  wliich  are  not  plainly  re- 
futed. We  spoke  last  week  of  the  manner  in 
which  Judge  Davis  has  been  attacked.  1  here 
is  doubtless  in  many  minds  a  regretful  feeling 
that  he  did  in  the  case  of  Phelps,  Dodge  &  Co. 
something  which  was  not  quite  candid  and 
upright;  and  we  propose  now  to  state  the 
simple  facts  which  a  careful  study  of  all  the 
testimony  in  that  c.tsc  reveals,  that  those  who 
are  not  resolved  to  denounce  him  mav  ecc  how 
honorable  and  blameless  his  conduct  was. 

Judge  Davis  was  District  Attorney,  the 
legal  adviser  and  counsel  of  the  government 
in  revenue  cases.  The  revenue  law  of  1799 
makes  actual  intent  to  defraiid  by  the  entries 
in  an  invoice  the  test  of  forfeitures  ;  and  the 
jury  must  find  that  the  acts  were  done  with 
intent  to  evade  the  payment  of  duties.  The 
law  of  1863  changed  this,  and  required  not 
that  the  importer  should  mean  to  defraud, 
but  only  that  the  irregular  entries  should  have 
been  knowingly  made.  The  method  of  invoic- 
ing adopted  by  Phelps,  Dodge  &  Co.,  in  per- 
fect good  faith  had  resulted  in  their  overpay- 
ments of  duties  being  largely  in  excess  of 
the  underpayments.  This  showed  plainly 
enough  that  there  was  no  intent  to  defraud. 
But  of  all  this  Judge  Davis  knew  nothing. 
His  attention  was  first  called  to  the  subject 
by  the  customs  authorities,  under  the  wretch- 
ed law  which  made  .rregularity  in  one  point, 
but  without  the  least  fraudulent  purpose, 
condemn  the  whole  invoice. 

He  had  but  three  interviews  with  the  cus- 
toms authorities  upon  the  subject.  At  the 
first  he  saw  the  affidavit  alleging  the  errone- 
ous valuations,  but  there  was  nothing  to  show 
that  the  government  had  been  the  gainer  by 
the  whole  transaction.     He  did,  therefore, 


what  under  the  law  was  his  plain  duty ;  he 
advised  that  it  was  a  ca.se  for  investigation. 
From  that  time  ho  had  nothing  more  to  do 
with  tlie  case,  Jay  no  continuing  the  investi- 
gation, until  his  advice  was  again  sought  by 
the  government.  He  tlien  had  an  interview 
with  Jayno  and  the  counsel  for  Phelps,  Dodge 
tt  Co.,  who  had  advised  a  settlement,  to  which 
the  firm  had  assented.  Judge  Davis  had 
neither  by  word  nor  deed  procured  or  urged  a 
!  settlement,  and  the  proof  of  it  is  the  constant 
I  friendly  regard  of  the  firm  for  him.  At  the 
I  interview  he  was  consulted  as  to  the  best 
method  of  settlement,  and  he  advised  that 
which  was  most  usual  in  this  class  of  cases, 
a  fact  which  relieves  him  from  the  imputation 
of  hurrying  a  settlement  for  his  own  advan- 
tage. The  third  interview  was  that  at  the 
Custom  House,  where  again,  as  the  legal  advi- 
ser of  the  government,  he  stated  the  fact, 
which  he  could  not  deny  or  conceal,  that  the 
courts  had  generally  held  that  the  whole  in- 
voice, and  not  the  tainted  items  only,  were  for- 
feited. This  was  undeniable,  and  Senator 
Conkling  gave  the  same  opinion  more  forci- 
bly. At  this  interview,  irritated  by  circum- 
stances that  had  been  broi  ght  to  his  knowl- 
edge, he  declined  to  take  any  fee,  and  stated 
his  belief  that  no  jury  would  ever  give  a  ver- 
dict for  tlie  government — that  is  to  say,  that 
there  coiild  ho.  no  evidences  of  fraud  or  actual 
loss  to  thegovernmen'.;  oflFered.  Judge  Davis 
did  nothing  but  his  plain  duty  during  all  this 
time. 

And  now  was  there  anything  in  his  subse- 
quent action  inconsistent  with  this?  He  be- 
lieved that,  under  the  law,  the  invoices  were 
liable  to  forfeiture,  and  that  the  projwsed  set- 
tlement was  legal  and  proper.  Intent  to  de- 
fraud had  nothing  whatever  to  do  with  the 
forfeiture.  The  Secretary  of  the  Treasury 
might,  indeed,  have  remitted  the  forfeiture, 
but  that  would  have  exposed  the  firm  to  a 
suit  and  judgment  for  a  vast  amount  under 
the  law,  with  serious  injury  to  their  credit. 
They  preferred  the  settlement,  with  which 
Judge  Davis  had  nothing  whatever  to  do. 
When  he  had  left  office,  and  when  one  of  the 
most  honorable  houses  in  the  country  was  held 
up  to  public  odium  as  swindlers  who  had  sought 


154 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


to  defraud  the  govornment.  and  when  the 
fact  transpired  that  the  overpayments  were 
largely  in  excess  of  the  underpayments — 
which  was  conclusive  against  fraudulent  in- 
tent, and  which  Judge  Davis  did  not  know  until 
he  had  lofl  office— with  the  natural  instinct 
of  an  honest  man  he  wro'.e  to  Mr.  Dodge  that 
ho  was  satisfied  there  was  no  intent  to  de- 
fraud, but  not  saying  that  under  the  law  the 
settlement  was  wrong  or  illegal,  which  would 
have  been  a  confession  that  his  own  conduct 
had  been  oppressive.  There  has,  therefore, 
been  no  change  of  position  or  opinion  wliat- 
ever  on  tlie  part  of  Judge  Davis.  Ilis  con- 
duct has  been  entirely  consistent  and  honor- 
able. The  law  undoubtedly  allowed  him  fees 
in  such  cases,  but  the  foes  did  not  depend  up- 
on fraudulent  intent,  and  the  fact  of  foes  did 
not  release  him  from  his  duty  to  advise  the 
government. 

As  for  letters  to  Jayne,  they  alluded  to  cer- 
tain just  and  lawful  dues  of  his  office,  which 
had  not  yet  been  paid,  and  which  ho  wished 
Jayne  not  to  forgot.  Judge  Davis  was  then 
upon  the  Supreme  Bonoh  for  fourteen  years, 
and  his  letters  could  not  mean  that  ho  wished 
business  from  Jayne.  So  in  regard  to  the  ex- 
pression that  ail  trouble  would  have  beon 
avoided  had  the  settlement  beon  made  as 
agreed,  it  refers  to  the  long  and  angry  con- 
troversy in  the  case  of  Phelps,  Dodgo  &  Co. 
The  evidence  in  the  whole  affair  shows  clear- 
ly to  an  impart.al  mind  that  Judge  Davis's 


conduct  throughout  was  that  of  an  honorable 
lawyer.  Nor  is  there  the  least  support  afford- 
ed by  it  for  the  bitter  calumnies  to  which  he 
has  been  subjected.  That  constant  and  ma- 
lignant hostility,  however,  is  only  one  of  the 
penalties  which  a  resolute  and  incorruptible 
magistrate  must  expect  to  pay  who  has  made 
himself  obnoxious  to  organized  and  powerful 
rascality.  It  was  a  striking  refutation  of  the 
slanders  which  liave  been  uttered  against  him 
that  at  the  late  dinner  of  the  Cliamber  of 
Commerce  Judge  Davis  should  have  been 
called  upon  by  Mr.  "William  E.  Dodge  in  these 
words,  which  were  received  with  immense 
applause ; 

*'  We  had  anticipated  the  pleasure  of  having 
our  highly  honored  Ciiief  Magistrate,  Gov. 
Dix,  respond  to  the  next  toast,  but  a  telegram 
has  been  received  expressing  his  regret  that 
the  pressure  of  public  duties  will  not  permit 
him  to  bo  present.  I  shall  ask  a  gentleman 
to  take  his  place  who  has  honorably  tilled 
many  high  positions  in  our  State,  and  has  re- 
cently commended  himself  to  tlio  esteem  of 
our  best  citiisons  by  his  honest  and  impartial 
trials  and  condemnations  of  the  men  who  had 
so  long  plundered  our  city  government,  though 
he  has  also  secured  the  enmity  of  those  who 
sympathized  with  their  cranes.  Ho  has  also 
taken  a  noble  stand  in  the  effort  to  secure  to 
our  merchants  a  revision  of  our  revenue  laws. 
"  I  will  call  on  the  Hon   Noah  Davis." 


KKPORT  OF  THE  COMITTKE  OF  AVAYS  AND  MEANS, 

AND  ACTION  THEREON  IN  THE  HOUSE 

OF  RItPRESENTATlVES. 


The  Committee  of  Ways  and  Means  of  iho  House  of  Kepresentatives, 
after  completing:  tlieir  investigations  in  respect  to  tlie  proceedings  of  Cus- 
tom IIous(}  officials,  under  the  several  Acts  of  Congress  authorizing  the  dis- 
tribution of  moieties,  the  employment  and  rewarding  of  informers  and  the 
arbitrary  seizures  of  books  and  papers,  gave  judgment  on  the  whole  sub- 
ject (and  by  iniplication  also  upon  the  case  of  Phelps,  Dodge  &  Co.,  which, 
as  already  siiown,  was  made  a  "pivotal  case"  before  them),  by  reporting 
on  the  19th  of  May,  1874,  through  Hon.  Ellis  H.  Roberts,  of  New  York,  a 
bill,  which  contained  the  following,  among  other  provisions: 

Kepealing  all  ])7'Ovmojis  of  law  iinder  uhivh  mcArlies  of  any  Jinea,  jnmallies 
orforfeilures,  or  any  shore  therein  or  commiamon  thereon,  are  paid  to  inform' 
ers  or  officers  of  cusloma,  or  other  officers  of  the  United  Stales;  and  providing 
that  from  and  offer  the  date  (f  the  passage  of  the  act  the  proceeds  of  all  fines, 
penalties  and  forfeitures  shall  be  paid  into  the  Treasury  of  the  United 
States. 

Repealing  all  j^^'ovisiojis  of  law  authorizing  the  arbitrary  seizure  of  hooks 
and  jxipo's,  and  in  lieu  thereof  providing,  that  in  all  suits  other  than  crimi- 
nal, arising  under  any  of  the  revenue  laws  of  the  United  States,  the  attor- 
ney representing  the  Government,  whenever,  in  his  belief,  any  business 
book,  invoice  or  paper,  belonging  to  or  under  the  control  of  the  defendant, 
will  tend  to  prove  any  allegation  made  by  the  United  States,  may  make  a 
written  motion,  particularly  describing  such  book,  invoice  or  paper,  and 
setting  forth  the  allegation  which  he  expects  to  prove;  and  thereupon  the 
court  shall  issue  a  notice  to  the  defendant  to  produce  such  book,  invoice 
or  paper  in  court,  at  a  day  and  hour  to  be  specified  in  said  notice,  and  if 
the  defendant  shall  fail  to  produce  such  book,  invoice  or  paper  in  obedience 
to  such  notice,  the  allegations  stated  in  the  said  motion  shall  be  taken  as 
confessed,  unless  his  failure  to  produce  the  same  shall  be  explained  to  the 
satisfaction  of  the  court.  And  the  said  attorney  shall  be  pecmitted  to 
make   examination  of  said  book,  invoice  or   paper,  if  produced,  and  may 


156  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

oflFer  the  same  in  evidence  on  behalf  of  the  United  States.  But  the  owner 
of  said  books  and  papers,  his  agent  or  attorney,  shall  have  free  access  to 
them  at  all  reasonable  times  pending  their  custody  by  the  court. 

Providing  that  the  Secretary  of  the  Treasury,  in  lieu  of  moieties  of  fines, 
penalties  and  forfeitures  heretofore  given  for  information  concerning  frauds 
upon  the  revenue,  other  than  direct  smuggling,  shall  make  suitable  com- 
pensation to  persons  giving  original  information  to  the  Government;  but 
that  such  compensation  shall  not,  in  any  one  case,  exceed  the  sum  of  five 
thousand  dollars. 

Other  provisions,  limited  the  fine  to  be  inflicted  on  any  importer 
for  fraudulent  undervaluations  to  the  sum  of  five  thousand  dollars, 
and  forfeiture  of  such  items  of  merchandise  to  which  the  fraud  relates;  al- 
lowed a  jury  to  pass  separately  upon  the  question  of  fraudulent  intent; 
and  forbid  the  maintenance  of  any  suit  or  action  on  the  part  of  the  United 
States  for  the  recovery  of  any  fine,  penalty  or  forfeiture,  unless  such  suit 
or  action  shall  be  commenced  within  two  years  after  the  time  when  such 
fine,  penalty  or  forfeiture  shall  have  accrued.  Another  section  also  pro- 
vided, that  when  any  goods  shall  have  been  once  entered  at  the  Custom 
House,  all  accruing  duties  settled  and  paid,  and  the  goods  delivered  to  the 
importer,  such  settlement  and  delivery,  in  the  absence  of  fraud,  and  in  de- 
fault of  protest  from  the  importer  or  his  agent,  shall  be  final  and  conclu- 
sive upon  all  parties. 


DEBATE    IN    THE    HOUSE. 


SPEECH  OF  HON.  ELLIS  H.  ROBERTS. 

In  reporting  this  bill  for  the  action  of  the  House,  Mr.  Roberts  spoke  in 
part,  as  follows: 

Mr.  Speaker,  the  measure  which  is  now  submitted  for  action  commands 
attention  by  its  importance.  It  deals  with  much  of  the  machinery  for  the 
enforcement  of  our  customs  revenue  laws.  It  reduces  penalties  and  for- 
feitures in  cases  designated.  It  submits  the  question  of  fraud  to  the  court 
or  jury  as  a  separate  issue.  It  reduces  the  period  of  limitation  within 
which  suits  maybe  commenced.  It  abolishes  the  whole  system  of  moieties, 
while  substituting  moderate  rewards  for  the  detection  of  crimes  against 
the  revenue.  It  sweeps  away  the  arbitrary  processes  for  the  seizure  of 
books  and  papers.     The  aim  is  to  do  brave  work  toward  the  adjustment  of 


AN  EXTRAORDINARY  HISTORY.  157 

customs  legislation  to  the  standard  of  freedom  and  intelligence  attained  in 
our  other  statutes. 

This  bill  is  the  outgrowth  of  a  careful  investigation  before  the  Committee 
of  Ways  and  Means,  which  began  on  the  Hth  of  February  and  closed  on 
the  28th  of  April,  and  which  is  recorded  in  a  volume  of  nearly  three  hun- 
dred pages  (Miscelhmeous  Document,  No.  264).  Representatives  of  the 
merchants  of  the  leading  cities  have  been  patiently  heard,  and  the  Com- 
mittee have  sought  information  from  the  most  competent  experts  in  the 
service  of  the  Government.  They  confidently  present  the  bill  as  worthy  to 
be  enacted  into  law  in  the  interest  of  the  revenues,  of  public  morality,  and 
of  commerce. 

APPEALS  FOR  ACTION. 

Rarely  have  stronger  appeals  come  to  Congress  than  those  for  the  re- 
forms here  proposed.  The  sense  of  wrong  had  grown  to  be  profound  and 
general  among  merchants.  It  found  expression  in  passionate  indignation, 
in  glowing  appeals,  and  in  the  more  eloquent  language  of  personal  incident 
and  unquestioned  fact.  Your  customs  laws  rankled  like  fetters.  You  col- 
lected your  revenues  without  armies,  but  hate  was  setting  in  the  hearts  of 
those  who  saw  their  neighbors  crushed  about  them.  You  wrung  your  for- 
feitures from  the  careless  as  well  as  the  criminal,  and  the  enormity  of  the 
penalty  made  the  offence  appear  trivial.  Ruin  trod  in  the  footsteps  of 
officers.  The  emoluments  of  prosecutors  and  their  attorneys  exceeded  the 
salary  of  your  President  and  of  all  the  Justices  of  the  Supreme  Court.  The 
informer  had  but  to  "  strike,"  and  strong  men  grew  pale,  great  houses  tot- 
tered, while  spoils  were  gathered  in  by  a  charmed  circle. 

OFFENCES  HAVE  BEEN  COMMITTED. 

Offences  have  been  committed  against  the  revenue.  But  crime  may  be 
cultivated  instead  of  being  prevented.  Cruel  and  extreme  penalties  culti- 
vate it.  If  it  be  fraud  to  misconstrue  a  statute,  crime  is  inevitable.  At 
the  best,  attempts  will  be  made  to  defraud  the  revenue.  They  will  increase, 
and  the  chance  of  punishment  will  be  diminished,  whenever  public  senti- 
ment pronounces  the  laws  unduly  severe,  and  their  application  harsh  and 
oppressive. 

DUTY  TO  REMOVE  JUST  GROUND  OF  COMPLAINT. 

The  first  duty  of  the  Government  is  to  remove  every  just  ground  of  com- 
plaint Against  the  laws  and  their  administration.  When  that  is  done,  en- 
force them  without  fear  or  favor.  Our  institutions  depend  on  the  good 
will  of  the  citizen.     For  the  collection  of  the  revenue,  one  of  the  primary 


158  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

essentials  is  the  moral  support  of  those  who  pay.  This  has  been  to  an 
alarming  degree  lost.  Sympathy  has  been  aroused  for  those  charged  with 
offences  against  the  customs.  Penalties  enforced  in  accordance  with  the 
letter  of  the  law  have  excited  odium.  The  machinery  of  a  past  age,  the 
rigors  of  the  war  period,  the  monstrous  forfeitures  of  our  system  have 
borne  their  natural  fruit.  Violation  of  the  laws  has  ceased  to  affix  oppro- 
brium. Their  enforcement  carries  a  taint  as  in  the  case  of  the  old  fugitive 
slave  law. 

DEMORALIZATION  OF  IMPORTERS. 

We  have  heard  general  denunciations  of  demoralization  among  import- 
ers. Commerce  is  not  a  prohibited  occupation.  Men  honorable  in  every 
other  relation,  an  entire  class,  including  those  who  bear  the  ark  of  religion 
and  the  sacred  fires  of  art,  and  who  sustain  the  very  fabric  of  society,  can- 
not be  all  knaves  in  their  transactions  with  the  Government.  If  they  be 
offenders,  provide  penalties  against  them  which  can  be  enforced  by  the 
courts.  Let  them  be  certain,  and  not  dependent  upon  the  temper  of  cus- 
toms officers,  nor  the  discretion  of  the  Secretary  of  the  Treasury.  Your 
fines  and  forfeitures  are  now  so  enormous  that  suits  begin  with  compromise 
and  often  end  in  remission. 

ODIUM  WITHOUT  PROFIT. 

The  Government  bears  the  odium  of  cruel  extortions  without  their  profit. 
Our  statutes  array  merchants  in  hostility  without  advantage.  The  honest  im- 
porter is  annoyed  and  terrified  by  the  shadow  of  ruinous  penalties  never  col- 
lected. It  will  cost  nothing  to  change  this  situation.  Very  much  can  be  gained. 
Those  who  pay  our  duties  are  citizens.  They  are  interested  in  our  insti- 
tutions. Besides  their  money  interest  in  an  equal  enforcement  of  the  laws, 
they  are  an  essential  part  of  the  constituency  from  which  the  Government 
proceeds  and  on  which  it  depends.  Their  aid  is  better  than  police.  Their 
support  is  better  than  armed  men.  Against  their  sense  of  wrong,  against 
their  aroused  moral  sentiment,  laws  and  officers  can  do  little.  Just  laws, 
reasonable  penalties,  humane  enforcement,  enlist  the  conscience,  the  inter- 
est, the  active  support  of  those  who  are  affected.  If  we  retain  the  pro- 
cesses, the  spirit,  the  harsh  severity  of  barbaric  ages  in  laws  and  admin- 
istration, we  must  expect  the  restiveness,  the  attempts  at  fraud,  the  moral 
resistance  which  extreme  measures  always  invite. 

Mr.  Speaker,  the  purpose  of  this  bill  is  to  protect  the  liberties  of  the  citi- 
zen, to  mitigate  enormities  in  the  statutes  which  have  interfered  with  their 
due  enforcement,  and  to  provide  sure  and  certain  methods  of  collecting  the 
customs  revenues.  The  changes  are  in  some  respects  radical,  but  they  are 
demanded  by  the  interests  of  the  Government  and  of  morality.     Instead  of 


AN  EXTRAORDINARY  HISTORY.  169 

demoralizing  emoluments  to  officers,  instead  of  arbitrary  processes  and  ab. 
solute  confiscation,  the  bill  appeals  to  the  good  will  of  the  citizen  and  to 
that  certainty  of  enforcement  of  judicious  penalties  which  are  the  only 
trust  of  a  free  government.  Sir,  let  Congress  abolish  moieties  ;  let  it  pro- 
tect the  secrets  of  business  and  friendship  from  arbitrary  invasion;  let  it 
free  commerce  from  cruel  and  unreasonable  penalties;  let  it  punish  inten- 
tional fraud  more  than  carelessness  or  honest  misconstruction;  let  it  thus 
enlist  the  conscience  as  well  as  the  interest  of  the  merchant  in  the  collec- 
tion of  customs,  and  you  mark  an  epoch  in  legislation. 


SPEECH  OF  HON.  JAMES  B.  BECK. 

Mr.  Roberts  was  followed  by  Mr.  Beck,  another  member  of  the  Committee 
who  spoke  as  follows  : 

Mr.  Speaker — No  question  has  engaged  the  attention  of  the  Committee 
on  Ways  and  Means  so  earnestly  since  1  have  been  a  member  of  it,  as  that 
now  submitted  to  the  House  for  its  action.  Upon  a  careful  examination  of 
the  subject  we  found  a  system  of  laws  in  force  which  are  in  many  regards 
a  disgrace  to  any  civilized  country,  among  the  most  odious  of  which  are 
those  which  allow  the  seizure  of  the  books  and  papers  of  merchants  by  the 
officers  of  the  Government  to  be  used  as  evidence  against  them  in  suits  for 
penalties  and  forfeitures.  We  found  that  the  Government  divided  the  spoils, 
often  obtained  by  the  most  corrupt  and  dishonest  means,  with  the  most 
disreputable  men,  making  the  whole  people  their  partners  in  the  most  scan- 
dalous combinations  against  individual  citizens.  We  found  excessive  fines 
and  forfeitures  inflicted  and  imposed,  regardless  often  of  whether  guilty  in. 
tent  existed  or  not,  and  men  deprived  of  the  right  of  trial  by  jury  upon  that 
most  vital  question.  In  short,  we  found  such  a  state  of  things  as  rendered 
some  such  bill  as  we  have  presented  necessary  in  the  opinion  of  the  Com- 
mittee. 

We  may  have  gone  too  far,  or  we  may  not  have  gone  far  enough  in  our 
eflForts  to  reform  and  remedy  these  evils;  it  is  for  the  House  to  decide. 
My  duty,  especially  as  a  member  of  the  sub-committee  which  drafted  it,  is 
to  inform  the  House  why  I  agreed  to  the  leading  features  of  the  bill  as  pre- 
sented. 

The  first  section  repeals  absolutely,  and  I  hope  forever,  all  laws  and  parts 
of  laws  which  authorize  the  Government  or  any  officer  of  it,  on  any  pretense 
whatever,  to  seize  the  private  books  and  papers  of  citizens  and  force  them 
to  furnish  evidence  against  themselves  in  proceedings  for  penalties  and  for- 
feitures.    The  law  giving  the  Government  that  right  was  first  enacted  in 


160  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

1863,  in  the  midst  of  the  civil  war,  when  laws  were  silent,  when  constitu- 
tional ri<2;hts  and  congressional  limitations  were  too  otten  disregarded,  when 
the  plea  of  necessity  justitied  all  usurpations,  and  the  complaint  of  the  citi- 
zen was  generally  disregarded  both  in  and  out  of  Congress  by  those  in  au- 
thority. Such  a  law  could  never  be  enacted  in  time  of  peace  by  the  repre- 
sentatives of  a  free  people. 

Sir,  it  is  impossible  to  read  the  testimony  taken  by  the  Committee  on  this 
subject  without  feeling  not  only  that  a  deep  and  burning  wrong  is  done  to 
the  citizen  by  dragging  his  most  sacred  and  confidential  papers  into  court 
to  convict  him  of  crimes  and  misdemeanors  which  degrade,  disgrace  and 
bankrupt  him,  but  that  the  Government  is  degraded  and  disgraced  in  the 
eyes  of  the  civijized  world  by  the  foul  means  it  resorts  to  for  the  purpose  of 
extorting  evidence  against  and  money  from  its  citizens. 

HOW  THE  CASE  OF  PHELPS,  DODGE  &  CO.  APPEARED  TO  THE  COMMITTEE. 

Take  the  case  of  Phelps,  Dodge  &  Co.  as  an  illustration.  I  select  that 
because,  in  the  language  of  Detective  Jayne,  of  its  *'  having  been  miade  a 
sort  of  pivotal  case,"  oae  (as  Mr.  Jayne  assured  Mr.  Dodge  in  the  presence 
of  Judge  Davis,  and  repeated  substantially  before  the  committee)  of  the 
worst  he  ever  saw,  in  which  he  charged  that  for  a  series  of  years  deliberate 
attempts  to  defraud  the  revenue  had  been  made  by  systematic  perjury  and 
false  invoices  and  undervaluations. 

That  firm  had  carried  on  business  in  New  York  for  many  years  ;  they 
had  imported  goods  to  the  value  of  between  three  and  four  hundred  million 
dollars  ;  they  had  paid  in  duties  to  the  Government  over  $50,000,000  ;  their 
good  name  and  integrity  had  never  been  assailed.  But  they  had  a  thief  in 
their  employ,  a  trusted,  confidential  clerk,  who  had  access  to  all  their  books 
and  papers.  Tempted,  perhaps  by  Custom  House  officials,  who  would  share 
the  spoil  and  avoid  the  disgrace,  he  violated  the  trust  reposed  in  him,  be- 
trayed his  benefactors,  mutilated  the  books  he  was  bound  by  every  principle 
of  honor  and  of  honesty  to  protect  and  preserve,  stole  the  private  papers  of 
his  employers,  and  carried  the  evidence  of  his  own  shame  and  dishonor  to 
the  Custom  House  detectives  and  officials,  who  entered  at  once  into  partner- 
ship with  him  in  the  nefarious  scheme  of  robbing  respectable  merchants 
for  private  gain,  and  brought  the  whole  power  of  the  Government  to  sup- 
port them,  under  pretence  that  they  were  protecting  our  revenues.  Affi- 
davits were  made  at  once,  warrants  were  ordered,  the  members  of  the  firm 
were  arraigned,  denounced,  and  threatened  with  ruin,  degradation,  infamy 
and  imprisonment  if  they  did  not  consent  to  place  all  their  books  and  papers 
in  the  possession  and  at  the  disposal  of  the  harpies  who  were  determined  to 
prey  upon  them.     Conscious  of  innocence,  while  fearful  of  exposure  which 


AN  EXTRAORDINARY  HISTORY.  IGl 

would  not  fail  to  injure  their  credit,  especially  abroad,  where  people  assume 
that  Government  will  not  bring  such  charges  against  a  citizen  unless  they 
are  certainly  true,  they  agreed  at  once  that  all  books  and  papers  desired 
might  be  taken,  and  they  were  carried  to  Jayne's  office  by  the  cart  load. 

Once  in  possession  of  all  the  evidences  of  guilt  or  innocence,  the  next 
step  was  to  proclaim  to  the  world  through  the  press  the  guilt  of  the  firm, 
and  to  so  magnify  the  case  as  to  make  the  settlement  on  any  terms  the  only 
alternative  to  escape  from  absolute  ruin.  Claims,  the  nature  of  which  were 
never  explained,  were  asserted,  amounting  to  $1,750,000,  and  a  compromise 
was  finally  effected  at  $271,000.  I  propose  to  let  Mr.  Dodge  tell  how  jind 
why  it  was  settled. 

Mr.  Beck  here  quoted  at  length  from  the  speech  of  Mr.  Dodge  before  the 
Committee,  and  continued  as  follows  : 

It  requires  no  arguraentc  to  prove  how  utterly  helpless  these  merchants 
were  in  the  hands  of  such  a  power,  stimulated  by  such  incentives  to  fasten 
guilt  upon  them.  Not  one  of  these  men  could  get  a  dollar  if  they  did 
not  get  it  out  of  their  victims;  all  could  reap  a  rich  harvest  if  they  could 
by  any  means  force  them  to  yield  to  their  demands.  The  costs  in  court, 
though  nothing  was  done,  amounted  to  $8,145  09.  The  share  of  the  dis- 
trict attorney  in  the  $271,000  was  over  $5,400;  that  of  the  collector,  naval 
officer  and  surveyor  was  $21,906  01  each,  or  $65,718  03  in  all.  Jayne  got 
$65,718  03,  which  he  was  to  divide  with  the  thief  who  stole  the  papers. 
General  Butler  was  paid  a  large  fee  out  of  his  and  the  thiefs  portion  by 
Jayne.  How  much  Senator  Conkling  got  as  adviser  of  the  Custom  House 
officers  does  not  appear.  They  failed  to  avail  themselves  of  our  invitation 
or  notification  that  we  would  gladly  hear  them  if  they  had  anything  to 
say,  so  that  we  were  unable  to  prove  what  their  private  arrangements  with 
counsel  were. 

With  such  an  array  of  officials  against  the  merchants,  what  was  an  ap- 
peal to  the  Secretary  worth  ?  Every  officer  on  whom  he  could  rely  for  infor- 
mation was  directly  and  largely  interested  in  having  the  highest  penalty 
imposed.  The  leading  administration  Senator,  and  one  of  the  ablest  repub- 
lican members  of  this  House,  were  their  advocates  and  attorneys.  What 
private  man  stood  any  chance  with  the  Secretary  under  such  circum- 
stances? What  Secretary,  under  such  an  administration  as  this,  would 
dare  to  oppose  such  a  combination  ?  Sir,  it  was  apparent  from  the  first 
that  they  had  to  pay  whatever  sum  they  were  told  would  satisfy  the  rapa- 
city of  their  persecutors,  and  (hey  paid  it.  Any  of  us  would  have  done  as 
they  did.  Mr.  Schultz  stated  the  case  vigorously  and  truly  when  he 
said: 

11 


162  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Every  official  with  whom  he  comes  in  contact,  except  tlie  Judge  and  the  Secretary  of  the 
Treasury,  have  a  direct  pecuniary  interest  against  the  merchant.  Let  the  law  be  so 
amended  that  these  two  functionaries  can  receive  a  portion  of  the  moieties,  and  then  so  far 
as  human  motive  can  be  controlled  by  sordid  influences  a  perfect  system  of  confiscation 
exists. 

With  their  books  and  papers  in  the  hands  of  their  enemies,  their  credit 
gone,  their  business  paralyzed,  their  good  name  blasted  by  the  action  of 
the  Government;  charges  of  fraud  and  robbery,  the  nature  of  which  they 
did  not  understand,  which  were,  of  course,  magnified  and  circulated  to  all 
parts  of  the  world  where  they  had  business  connections  by  their  com- 
petitors in  trade,  as  the  officials  knew  and  intended  they  should  be—these 
things  were,  as  Mr.  Dodge  truly  said,  "  the  terror  held  over  us,  the  pistol 
at  our  ears.  That,"  he  aded,  "  was  the  reason  we  were  anxious  to  have  it 
settled  even  by  the  pa3nng  of  $210,000."  With  seven  eminent  lawyers 
engaged,  and  constantly  contriving  how  to  catch  them;  entrapped  for 
alleged  fraud  not  known  to  them,  and  never  explained,  of  $1,600  in  five  years, 
though  in  that  time  their  ovei-  valuations,  of  which  the  Government  got  the 
benefit  (all  of  which  were  artfully  concealed  by  those  who  held  the  books), 
amounted  to  hundreds  of  thousands  of  dollars,  altogether  constituted  one 
of  the  most  shameless  cases  of  extortion  I  ever  heard  of.  And  this  was 
the  pivotal  case. 

Otlier  cases  brought  before  us  were  nearly  as  bad.  Perhaps  that  of  Mr. 
Caldwell,  of  Philadelphia,  taken  in  all  its  relations,  was  worse.  The  extor- 
tortion  of  $50,000  from  AVoodrufif  &  Robinson  was  not  much  better.  After 
patient  hearing  and  careful  study  I  became  thoroughly  satisfied  that  the 
safety  of  the  citizens  and  the  good  of  the  Government  alike  required  that 
all  laws  authorizing  the  seizures  of  books  and  papers  on  any  pretext  what- 
ever, should  be  at  once  repealed,  and  that  all  moieties  to  Custom  House 
officials  and  informers  should  be  abolished,  except  in  cases  of  smuggling,  of 
which  I  will  speak  presently.  I  would  go  a  step  farther,  and  prohibit  by 
positive  law,  under  the  severest  penalties,  all  Government  officials  and  all 
members  of  Congress,  Avhether  Senators  or  Representatives,  from  being 
employed,  either  directly  or  indirectly,  as  counsel  for  spies,  informers,  Custom 
House  or  other  officials,  in  any  matter  relating  to  the  revenues  of  the  Gov- 
ernment. They  are  now  prohibited  by  law  from  prosecuting  claims  against 
the  Government,  either  in  the  Court  of  Claims,  before  the  Departments,  or 
the  Committees  of  Congress.  They  should  not  be  allowed  to  use  the  power 
and  influence  which  official  position  gives  them  to  make  money  out  of  the 
citizen  under  the  pretences  that  they  are  serving  the  Government,  in  any 
court  or  before  any  tribunal. 

Representative  men,  whether  of  States  or  people,  ought,  so  long  as  that 


AN  EXTRAORDINARY  HISTORY.  163 

relation  exists,  to  be  prohibited  from  taking  part  in  or  making  money  out 
of  controversies  between  the  Government  and  its  citizens  on  either  side.  I 
shall  try  to  so  amend  this  bill  as  to  attain  that  end.  Now,  members  ot 
Congress  are  sought  for  and  employed  by  spies  and  officials,  not  as  other 
men  are,  because  of  their  ability  as  lawyers,  but  because  of  the  influence, 
political  or  otherwise,  they  are  supposed  or  known  to  exert  over  the  Secre- 
tary of  the  Treasury  and  his  subordinates.  I  repeat,  and  his  subordinates  ; 
because  the  proof  in  the  Sanborn  contracts  shows  conclusively  that  nearly, 
if  not  quite  all,  of  the  decisions  of  the  Secretary  are  in  fact  the  decisions  of 
mere  subordinates,  his  name  and  apparent  authority  being  only  official 
routine.  Let  it  be  remembered  that  the.se  subordinates  are  not  put  or  kept 
in  their  positions  by  the  Secretary;  they  may  be,  and  often  are  there 
against  his  will,  placed  and  kept  there  by  the  influence  and  authority 
of  the  Senators  and  Representatives  whose  fees  depend  upon  their  de- 
cisions. 

The  spies  and  other  interested  officials  soon  learh  what  member  of  Con- 
gress can  best  control  official  action  in  the  Treasury  Department,  and  that 
member  becomes  their  hired  attorney.  If  the  officer  who  has  the  case  sub- 
mitted to  him  was  ever  so  honest,  it  is  unreasonable  to  expect  that  he  will 
dare  to  disobey,  and  he  will  not  be  inclined  to  disoblige  the  man  who  put 
him  where  he  is,  and  who  can  have  him  removed  and  a  more  pliant  tool 
put  in  his  place  if  he  fails  to  decide  as  he  is  ordered  or  expected.  As  con- 
ducted now,  suph  proceedings  are  a  mockery  and  a  farce.  Does  any  man 
here  believe,  for  example,  that  any  subordinate,  or  even  the  present  Secre- 
tary, would  dare  to  disobey  the  known  wishes  of  Senator  Conkling  and 
General  Butler — both  of  whom,  as  Mr.  Dodge,  Judge  Davis  and  Mr.  Jayne 
show,  were  acting  as  counsel  for  the  officials  or  informers  in  the  Dodge 
case  ?  Both,  of  course,  were  selected  because  of  their  well  known  political 
power  and  influence  in  high  places,  and  both  were  prominently  exhibited 
to  the  merchants  as  a  standing  menace  to  enforce  settlements  on  the  terms 
demanded. 

Mr,  Kasson, — I  hope  the  gentleman  will  say  that  there  was  not  a  particle 
of  evidence  indicating  that  Senator  Conkling  received  anything. 

Mr.  Beck. — There  was  evidence  thai  he  was  the  counsel  and  adviser  of 
these  men.  The  gentleman  will  find  it  in  the  evidence  of  Judge  Davis,  Mr. 
Dodge,  and  others;  and  the  men  who  employed  him,  and  whose  counsel  he 
was,  refused  to  come  before  the  committee  on  a  polite  invitation,  and  there- 
fore we  could  not  develop  what  the  facts  were. 

Mr.  Kasson. — In  the  interest  of  justice  I  suppose  the  gentleman  will  allow 
it  to  be  stated  in  this  connection  that  the  evidence  was  simply  that  the 
Senator  was  in  the  room  on  one  occasion  reading  the  United  States  statute 
as  a  citizen  simply,     I  wish  the  gentleman  to  do  justice  in  the  matter. 


164  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

Mr.  Beck. — Well,  Mr.  Dodge,  in  his  sworn  testimony,  says  that  Senator 
Conkling  was  in  New  York  in  consultation  with  these  officers  at  a  time 
when  for  two  days  the  question  was  whether  the  amount  paid  should  be 
$500,000  or  $211,000.  There  is  evidence  that  he  was  there  acting  practi- 
cally as  counsel,  and  his  clients  should  have  come  before  the  Committee  and 
told  them  what  they  paid  him,  if  they  paid  him  anything,  or  if  they  did  not 
pay  him  anything. 

Mr.  Hale,  of  New  York. — Will  the  genthman  permit  me  a  moment  in  this 
connection  ?  I  think  he  is  doing  injustice  to  a  gentleman,  which  I  am  sure 
he  would  not  intend  to  do. 

Mr.  Beck. — 1  have  not  time  to  yield  for  interruptions.  I  have  done 
Senator  Conkling  no  injustice.  I  have  made  no  charge  against  Senator 
Conkling.  1  say  that  the  testimony  shows  that  he  was  there  as  counsel 
for  these  men. 

Mr.  Hale,  of  New  York. — The  gentleman  is  certainly  in  error  in  that 
regard. 

Mr.  Beck.— He  was  counsel  and  advised  with  them,  and  Mr.  Dodge  swore 
that  he  believed  that  he  helped  to  bring  down  the  amount  from  $500,000 
to  $271,000.  What  I  call  attention  to  is  this  point:  What  chance  had  the 
merchants  in  that  state  of  the  case  ?  what  chance  w^as  there  that  justice 
w^ould  be  done  to  them,  when  the  surveyor,  the  collector,  the  naval  officer, 
the  district  attorney,  the  special  agent,  the  informei — all  the  officials  to 
whom  he  could  look — were  interested,  and  had  been  paid  bribes,  if  you 
please,  to  decide  against  the  merchants,  and  a  leading  Senator  of  the  Ad- 
ministration party  was  their  adviser,  and  one  of  the  ablest  republican  mem- 
bers of  the  House  was  counsel  for  the  informer?  Under  circumstances  like 
these  was  it  not  evident  that  this  firm  of  merchants  had  to  pay  what- 
ever was  demanded  ?  Would  not  you  have  done  it  ?  Would  not  any  of 
of  us  have  done  it  ? 

I  would,  I  repeat,  by  laws  which  could  not  be  evaded,  make  such  things 
impossible.  Till  it  is  done  appeals  to  the  Secretary  are  a  delusion 
and  a  snare*  I  hope  the  House  will  hereafter  prohibit  Representatives 
from  interfering  in  any  way  between  the  Government  and  the  citizen. 
Congress  should  be  the  highest  court  in  the  land,  and  its  members 
should  all  be  free  to  listen  without  partiality  or  prejudice,  certainly 
without  personal  or  pecuniary  interest,  to  all  the  appeals  of  the 
people. 

Mr.  Ellis  H.  Roberts. — I  would  ask  the  gentleman  from  Kentucky  if  he 
has  any  reason  to  mention  the  name  of  the  Senator  here  ?  He  knows  very 
well  that  Mr.  Dodge  expressly  testified-  that  the  Senator  he  names  he  sup- 
posed was  there  not  as  counsel. 


AN  EXTRAORDINARY  HISTORY.  165 

Mr.  Beck. — Who  said  so  ? 

Mr.  Ellis  H.  Roberts. — Mr.  Dodge. 

Mr.  Beck. — Mr.  Dodge  did  not  say  so. 

Mr.  Kasson. — If  tlie  gentleman  will  allow  the  language  referred  to  to 
be  read,  it  will  satisfy  him  ;  if  not,  I  will  read  it  myself  when  1  get  the 
floor. 

Mr.  Beck. — Senator  Conkling  was  there  reading  the  law  and  expounding 
its  bearings  as  the  friend  and  adviser  of  the  Custom  House  ofl5eials— a  thing 
which  he  should  not  be  allowed  to  do,  that  no  Senator  or  Representative 
ought  to  be  allowed  to  do,  and  if  my  amendment  prevails,  they  will  never  do 
it  in  the  future- 
Mr.  Ellis  H.  Roberts. — I  would  ask  the  gentleman  from  Kentucky 
whether,  as  a  lawyer,  he  thinks  that  it  is  a  just  thing  to  say  that  a  man  is 
guilty  of  receiving  pay  because  no  evidence  was  submitted  that  he  did  not 
receive  pay  ? 

Mr.  Beck. — This  Senator  had  a  right  to  be  there  under  the  law. 

Mr.  Ellis  H.  Roberts. — Very  well. 

Mr.  Beck. — I  am  not  complaining  about  that;  but  I  deny  that  such  a  law 
should  exist.  I  deny  that  a  man  who  is  a  leading  Administration  Senator 
should  have  a  right  to  go  and  advise  the  Custom  House  officers  against  a 
citizen  and  to  give  the  weight  of  his  influence,  his  name,  and  his  authority 
against  the  citizen. 

Mr.  Ellis  H.  Roberts. — The  gentleman  from  Kentucky  says  that  the 
Senator  to  whom  he  refers  had  a  right  to  be  there. 

Mr.  Beck. — He  did. 

Mr.  Ellis  H.  Roberts. — Did  not  Mr.  Dodge  also  ex  pressly  discraim  any 
belief  that  he  was  there  other  than  as  a  citizen  ? 

Mr.  Beck. — I  will  read  for  the  third  time  the  testimony  of  Mr.  Dodge 
upon  that  point  : 

Mr.  Fo3Ter. — I  think  you  stated  when  you  wore  here  the  other  day,  Mr.  Dodge. 
that  there  were  lawyers,  ni3mb3r3  of  Con^r33-j,  who  wore  acting  as  coaiusol  for  those 
parties. 

Was  not  that  a  plain  question  ? 

Ml'.  Dodge. — I  did  say  so. 

Mr.  Foster. — Well,  I  tind  that  this  Committee  and  myself  have  been  subjected  to  criti- 
cisai  because  we  brought  out  the  name  of  only  one  such  member,  while  there  were 
others 

Mr.  Dodge. — I  only  intendal  to  spsak  of  two.  I  have  no  hesitation  in  stating  who  they 
were  after  all  tint  ha?  b.'on  said  b3ror3  this  C  iramittee.  I  have  purpasely  avoided  naming 
them  heretofore,  but  if  the  Comnittse  wish  I  have  no  objection. 

The  Chairmax. — You  may  answer  the  question. 
'     Mr.  Dodge. — I  supposG  there  is  no  doubt  in  the  Committee's  mind  on  the  subject  now,  as 


166  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

it  was  admitted  last  niglit  by  the  special  agent  that  he  did  employ,  in  one  case  especi- 
ally, General  Butler  as  counsel.  I  will  add  that  Senator  Conkling  was  in  New  York  and 
in  consultation  with  these  gentlemen  at  the  time  when  for  two  days  the  question  hung 
wljether  this  thing  should  be  settled  or  not,  and  hung  simply  on  the  fact  that  Mr.  Laflin 
said  the  crime  was  so  enormous  that,  so  far  as  he  was  concerned,  he  never  would  con- 
f^ent  to  settle  it  short  of  the  payment  of  $500,000  by  Phelps.  Dodge  &  Co.  I  think 
.Senator  Conkling  advised  him  to  do  better.  I  only  wish  he  had  stuck  to  it  one  day 
longer. 

Afr.  Beck. — The  naval  officer,  Mr.  Laflin,  is  well  known  to  have  been 
appointed  by  the  Senator  ;  and  the  Custom  ring-,  if  you  force  me  to  go  into 
politics,  is  supported  by  this  Administration,  of  which  that  Senator  is  a 
leading:  friend,  for  the  purpose  of  raising  money  this  way,  and  by  the  use 
of  the  money  thus  acquired,  thus  stolen  from  the  merchants,  to  carry  out 
the  party  machinery.  I  might  go  a  good  deal  further  in  that  direction, 
but  I  will  not,  for  my  time  is  running  fast.  I  might  go  on  and  show  that 
when  these  parties  see  where  they  can  make  money  out  of  the  citizen,  they 
do  not  wait  to  prove  what  he  was.  Mr.  Dodge  was  loyal  enough.  I  am 
told  he  gave  $25,000  to  help  elect  your  present  President.  But  these 
men  were  after  the  life  blood  of  this  firm,  and  they  came  very  near 
getting  it. 

But,  Mr.  Speaker,  I  must  hasten  to  notice  other  important  changes  in  the 
law  proposed  by  the  bill  now  before  us.  Moieties  gnd  seizures  are  twin 
al)ominations.  They  ought  to  die  together  and  he  consigned  to  the  same 
io-nominious  grave.  Without  the  moiety  system  seizures  would  never 
have  been  resorted  to.  The  enormous  rewards  ofifered  and  the  temptations 
placed  before  bad  or  even  weak  men  are  too  great  to  be  resisted.  Under 
them  private  virtue  and  honor  as  well  as  official  integrity  give  way,  and  a 
system  of  corrupt  espionage  and  robbery  has  grown  up  which,  if  not 
crushed  out  by  vigorous  laws,  will  destroy  what  little  of  honesty  is  left  in 
the  ptiblic  service,  together  with  all  that  makes  the  business  relations  of 
men  either  respectable  or  safe. 

Worse,  if  possible,  even  than  that,  the  money  extorted  by  robbery  and 
fraud  is  so  distributed  among  the  officials  that  those  who  act  as  judges  and 
arrange  the  terms  of  settlement,  the  men  on  whose  statement  of  fact  the 
Secretary  of  the  Treasury  has  to  rely  for  the  truth,  are  all  paid  to  decide 
against  the  citizen.  Take  the  Dodge  case  again  as  an  illustration.  The 
Surveyor,  Naval  Officer  and  Collector  were  each  bribed  to  the  extent  of 
$21,900  to  decide  against  the  merchant  whose  books  and  papers  they  held 
and  used,  though  obtained  from  a  known  and  acknowledged  thief.  Jayne 
and  his  accomplices  got  over  $65,000,  while  the  United  States  Attorney, 
clerks  and  marshals  pocketed  $8,145  as  their  share  of  the  sjjoils — every  dol- 
lar of  these  immense  sums  being  dependent  on  their  success  in  coercing  a* 


AN  EXTRAOllDINARY  HISTORY.  167 

compromise  or  securing  a  conyiction.  Wherein  does  all  this  differ  from  the 
bribery  of  a  judge  or  jury  ? 

The  very  fountains  of  justice  arc  corrupted,  and  all  that  emanates  from 
such  polluted  sources  is  of  course  impure.  More  degrading  than  ail,  more 
humiliating  to  us  as  Representatives,  and  to  the  proud  and  honest  people 
we  represent,  is  the  fact  that  the  Government  is  by  legislation  made  the 
partner  of  thieves.  Think  of  the  American  people,  under  the  folds  of  the 
Star  Spangled  Banner,  boasting  of  thiir  advanced  civilization  and  pretend- 
ing to  look  with  scorn  and  contt-mpt  on  all  other  nations  because  of  our 
superiority  in  protecting  the  rights  of  our  citizens  with  Magna  Charta,  the 
Bill  of  Rights,  habeas  corpus,  and  all  the  bulwarks  of  liberty  crystalized  in 
our  own  great  charter,  sneaking  into  a  den  in  the  Custom  House  and  pay- 
ing over  to  their  detective,  Jayne,  $05,718  out  of  $271,000,  which  they  had 
extorted  from  citizens  against  whom  they  could  only  make  up  a  claim  for 
$1,600,  even  after  they  had  searched  their  books  and  papers  for  five  years, 
concealing  overpayments  twenty -fold  in  excess  of  the  claim,  and  whisper- 
ing in  his  ear  to  pay  $40,000  as  his  share  of  the  profits  of  the  speculation 
to  the  thief  who  had  stolen  the  papers  of  his  employers,  who  by  all  laws 
humnn  and  divine  should  have  been  spurned  as  an  outcast  and  doomed  to 
a  ielon's  cell,  only  requiring  him  to  be  sure  and  keep  ihe  facts  concealed. 

The  system  is  a  disgrace  to  our  civilization,  a  reproach  and  a  scandal  in 
the  eyes  of  all  nations  ;  one  which  has  been  condemned  by  our  Secretaries 
and  committees,  and  is  only  maintained  by  the  influence  which  political 
organizations  and  party  leaders  exert  to  uphold  it,  because  the  Custom 
House  officials  out  of  their  extortions  can  be  made  to  lurnish  the  money  in 
New  York,  Boston  and  elsewhere,  to  control  primary  elections,  pack  con- 
ventions, stuff  ballot  boxes,  and  do  the  other  dirty  work  lor  their  political 

patrons. 

JAY^'E'S  CHARACTER. 

I  propose  to  say  a  few  words  as  to  the  men  who  are  employed  to  do  this 
dirty  work,  and  the  means  they  employ  to  accomplish  it.  Mr.  Jayne  is  a 
type  of  the  men  who  become  informers  under  the  moiety  system.  I  select 
liim  becau&e  he  is  one  of  the  best  of  his  class — intelligent,  vigilant,  well 
informed,  and,  so  far  as  I  know,  conforming  strictly  to  the  laws  which  con- 
ferred authority  upon  him.  His  underlings  and  retainers  are  in  all  the 
prominent  mercantile  houses  of  New  York,  ready  to  ruin  the  men  whose 
devoted  friends  they  profess  to  be — perhaps  making  false  entries  for  years, 
so  they  can,  when  the  penalty  becomes  an  object,  charge  their  own  frauds 
upon  their  victims;  noting  and  concealing  every  irregularity,  so  as  to  pre- 
vent its  correction,  until  the  proper  time  arrives  to  lodge  their  information. 
His  operations  will  illustrate  the  system.     He  spoke  at  great  length  before 


168  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

tlie  Committee  of  Ways  and  Means,  and  he  was  examined  some  years  ap^o 
before  a  committee  of  the  Senate.  Perhaps  it  would  be  best  to  first  notice 
specimens  of  his  testimony  before  tlie  Senate  Committee  as  to  the  means 
resorted  to  in  order  to  procure  evidence  or  confessions  from  his  victims. 
{Mr.  Beck  hei^e  quoted /rem  the  mwvies  of  Jayne^s  investigation,  already  given 
in  the  speech  rf  Mr  Brainard  before  the  Ways  and  Means  Committee,  and 
continued :) 

This  picture  needs  nofillinjyup;  it  stands  out  on  the  canvas.  The  de- 
tective toying  with  the  handcuffs,  putting  them  on  his  own  wrists  to  let  the 
doomed  man  see  how  they  worked;  telling  his  victim  what  a  wicked  fellow 
he  had  been;  holding  up  to  him  the  terrors  of  the  law;  changing  his  tactics 
according  to  the  subject  he  had  to  deal  with;  urging  frank  confession  as  the 
safest  and  best  course,  furnishes  such  a  portrait  of  the  prostitution  of  every 
principle  of  justice  and  law  that  it  disgusts  a  man  to  think  of  the  scene. 

Mr.  Dodge  thus  describes  the  ordeal  he  had  to  pass  through  when  his 
books  and  papers  were  taken  from  him. 

{Mr.  Bech  then  quoted  from  the  description  of  his  first  interview  given  by 
Mr.  Dodge,  in  his  speech  before  the  Committee,  and  the  surrender  to  Jaynefor 
unrestricted  examination  of  the  books  of  the  firm,  and  continued  :) 

Of  course  (on  getting  the  books)  he  got  all  he  wanted,  and  so  used  them 
as  to  secure  for  himself  and  his  partners  $135,000,  the  Government  getting 
the  other  half  for  protecting  them  from  responsibility  for  the  extortion.  It 
seems  to  me  that  no  argument  is  needed  to  prove  that  such  a  system  should 
no  longer  be  tolerated;  the  repetition  of  such  wrongs  ought  to  be  rendered 
impossible.  The  effect  of  it  is  terribly  demoralizing  on  our  own  officials. 
Lured  from  the  performance  of  duty  by  hope  of  rich  rewards,  they  see,  it 
may  be,  day  by  day  irregularities  or  technical  violations  of  law  which  they 
know  are  unknown  to  the  merchant;  their  plain  duty  is  to  inform  him  at 
once  and  prevent  a  repetition  of  them;  their  interest  is  to  watch  and  wait 
so  as  to  allow  them  to  accumulate  for  months,  it  may  be  for  years,  and 
when  the  aggregate  will  secure  penalties  and  forfeitures  sufficient  to  gratify 
their  avarice,  make  the  seizure  and  demand  the  reward.  These  things,  as 
the  proof  before  us  showed,  are  of  constant  occurrence,  and  Will  continue 
till  we  remove  the  motive  for  their  continuance. 

Mr.  Beck  concluded  as  follows: 

Mr.  Speaker,  please  hold  your  gavel  one  moment.  I  have  sought  to 
avoid  politics  in  this  discussion,  and  think  I  have  done  so  wonderfully  well, 
considering  the  temptation;  we  avoid  them  in  the  Committee  of  Ways  and 
Means,  as  the  bill  we  have  reported  shows.  But  in  closing  I  will  show  that 
the  testimony  laid  by  us  before  the  House,  which  ought  to  be  in  the  hands 
of  every  citizen,  proves,  and  proves  conclusively,  that  the  Custom  Houses 


AN  EXTRAORDINARY  HISTORY.  169 

as  now  manap^ed  are  sinks  of  iniquity,  political  dens  supported  by  fraud, 
corruption  and  extortion  upon  the  commerce  of  the  country. 

Think  of  it,  sir;  $271,000  taken  from  one  firm  when  the  debt  was  only 
$1,600.  The  report  of  the  Secretary  (Executive  Document  No.  124)  shows 
that  during  this  administration  tliere  has  "be^n  paid  at  the  port  of  New 
York: 

To  informers $491,342  26 

To  the  Collector 174,137    57 

To  the  Naval  Officer 162,280  62 

To  the  Surveyor 159,476  04 

And  at  the  port  of  Boston  during  the  same  period: 

To  informers $152,798  18 

To  the  Collector 50,81 6  40 

To  the  Naval   Officer 50,817  74 

To  the  Surveyor 50,817  60 

While  the  collectors  were  receiving  as  salaries  16,000  a  year,  the  naval 
officers  $5,000,  and  the  surveyors  $4,500  each  besides. 

Sir,  these  things  ought  not  to  be.  No  country  can  prosper  while  they 
are  possible;  no  administration  can  be  successful  when  the  country  is  sat- 
isfied that  it  sustains,  endorses  and  approves  them.  It  is  a  system  which 
converts  our  Custom  House  officials  into  mere  political  tools  and  tricksters, 
whose  usefulness  is  measured  not  by  their  faitfifulness  in  the  collection  of 
the  revenues  but  in  the  power  they  can  bring  to  bear  to  control  primary 
elections,  pack  conventions,  stuff"  ballot  boxes  and  subvert  the  fundamental 
principles  of  republican  government  in  the  interest  of  the  political  tricksters 
to  whom  they  look  for  support,  and  on  whose  influence  they  can  rely  to 
sustain  them  against  all  eff'orts  at  exposure. 

Here  the  hammer  fell. 

JAYNE'S  PICTURE,  AS  DRAWN  BY  MR.  DAWES. 

Mr.  Dawes,  Chairman  of  the  Committee  of  Ways  and  Means,  followed  Mr. 
Beck  in  the  debate,  and  in  the  course  of  his  remarks  expressed  his  opinion 
of  Jayne  and  his  associates  as  follows: 

Sir,  who  is  the  informer  ?  He  is  to  have  half  of  the  whole.  The  offi- 
cials take  the  other  half  and  divide  it  into  three  parts.  His  is  the  lion's 
share.  Sir,  the  informer  in  every  position  of  society,  in  every  place,  and 
in  every  calling,  is  an  odious  and  despised  being.  Everybody  shrinks  from 
him,  no  matter  what  be  his  position  or  his  calling.  He  that  goes  about 
making  a  business  of  informing  against  his  neighbor,  so  shocks  the  com- 
mon sense  of  justice,  decency  and  honor  in  all  mankind,  that  he  is  univers- 


170  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

ally  despised.  But  let  him  do  it  for  pay;  let  it  be  understood  that  he  goes 
up  and  down  the  earth  paid  to  inform  against  his  fellow  men,  and  the 
intensity  of  the  feeling  of  hatred  with  which  he  is  regarded  and  the  feeling 
that  he  ought  to  be  hunted  around  the  earth  is  increased  tenfold.  Add  to 
that  that  he  is  to  have  half  of  what  may  be  made  out  of  his  informing. 
He  is  bad  enough  when  he  volunteers  without  compensation  from  any 
motives  of  malice  or  otherwise  to  inform  against  his  neighbor;  he  has  no 
place  whatever  in  decent  society.  But  when  he  does  it  for  pay,  much  more 
when  he  is  to  have  half  of  the  proceeds  of  his  cursed  employment,  the 
door  of  decent  society  ought  to  be  and  will  be  shut  against  him. 

The  leper  may  be  tolerated  among  men,  for  his  leprosy  is  his  misfortune. 
The  man  that  carries  about  him  a  loathsome  disease,  that  is  not  his  fault 
but  his  misfortune,  engages  the  charity  of  the  world  to  build  a  hospital  for 
liim  and  to  care  for  him  with  pity  and  compassion.  But  the  vile,  festering, 
putrescent  informer,  who  goes  about  the  earth  assured  of  one  half  of  what 
he  can  make  by  his  informing,  finds  no  place  as  yet  where  decent  men  will 
harbor,  or  countenance,  or  associate  with  him. 

Shall  the  Government  of  the  United  States  take  the  wages  of  his  sin  and 
his  iniquity  and  divide  it  with  him  ?  It  is  he  who  is  the  last  refuge  of  this 
system.  One  after  another  they  let  go,  or  give  up  and  throw  overboard, 
and  say  we  will  not  defend  them.  We  will  not  defend  an  official,  ap- 
pointed by  the  Government  perhaps,  for  his  good  character  and  under  the 
control  of  the  Government  in  his  actions,  subject  to  removal  if  he  abuses 
his  trust;  no,  we  are  willing  to  say  that  he  shall  not  have  this;  but  the 
man  who  is  under  no  control,  the  volunteer  who  cuts  himself  loose  thereby 
from  society,  without  either  calling  or  position,  forfeiting  by  the  very  will- 
ingness to  take  this  every  other  position  of  trust  and  confidence — it  seems 
it  is  thought  best  that  we  should  save  him,  it  seems  best  that  we  should 
save  and  guard  him  by  new  legislation,  that  he  may  have  one  half  or  one 
quarter,  it  may  be,  of  all  fees  and  penalties  and  forfeitures.  We  guard  this 
man,  roving  around  among  the  uKjrchants  of  the  cities  of  New  York,  Boston 
and  Philadelphia,  with  money  enough,  the  fruits  and  promises  of  his  suc- 
cess, to  enable  him  to  furnisli  the  means  that  will  invade  the  confidential 
relations  that  exist  between  the  merchant  and  his  clerks,  tainting  the  most 
sacred  trusts,  lying  in  wait  for  the  unwary,  as  it  was  shown  before  the 
Committee  of  Ways  and  Means  at  the  desk  of  the  Custom  House,  and  see- 
ing the  merchant  unwittingly  put  in  his  foot,  by  omitting,  it  may  be  by 
accident  or  by  ignorance,  or  by  any  of  a  thousand  'ways  consistent  with  his 
honesty,.to  conform  to  the  most  complicated  system  of  revenue  laws  that 
exist  in  the  world — standing,  I  say,  at  the  desk,  and  seeing  the  merchant 
from  day  to  day  op^enly  and   unconscious   of    anything  wrong,   making 


AN  EXTRAORDINARY  HISTORY.  171 

mistakes  in  liis  invoices,  with  a  law  behind  him  which  says  that  a  mistake 
in  one  item  forfeits  the  whole  invoice,  and  then  when  they  are  piled  up 
by  the  dozen  upon  the  desk  of  the  Custom  House,  {J^oing  and  informing 
against  him  and  getting  one  quarter  of  the  forfeitures!  And  if  the  mer- 
chant appeals  under  that  law  to  the  Collector  of  the  Port,  the  law  makes 
that  Collector  the  appellate  court.  If  he  decides  that  this  man  has  inno- 
cently, without  intention,  been  simply  guilty  of  a  technical  neglect,  he  lets 
him  go,  and  he  does  not  himself  get  anything  But  if  he  decides  that  the 
merchant  is  guilty,  he  gets  one  quarter.  The  court  that  this  law  has  pro- 
vided for  thd  merchant  to  appeal  to,  to  decide  whether  or  not  he  has  con- 
formed to  the  law,  has  one  half  of  all  the  penalties  if  he  decides  that  the 
man  violated  the  law,  and  if  he  decides  that  he  has  not  so  done,  he  does 
not  have  anytliing.  The  district  attorney,  who  is  put  there  as  the  officer  of 
the  Government  in  a  semi-judicial  character  to  see  that  justice  is  done  be- 
tween the  Government  and  the  accused,  gets  two  per  cent,  of  all,  and  the 
informer  gets  what  I  have  told  you. 

Through  the  portals  of  the  ports  of  New  York  and  of  Boston  enters 
seven  eighths  of  the  commerce  of  the  country,  and,  consequently,  seven 
eighths  of  all  the  wealth  that  comes  to  our  shores  in  the  vessels  that  plough 
the  deep  and  whiten  every  ocean  with  their  sails.  Some  of  the  men  who 
manage  this  commerce  are  styled  contemptuously  "merchant  princes." 
Some  of  them  have  become  such  by  indu.^try,  frugality,  and  fidelity  to  busi- 
ness relations  with  everybody  else  certainly  but  the  Government.  Some 
of  them  are  young  and  enterprising  men,  beginning  without  capital  and 
growing  by  devotion  to  an  honorable  calling,  most  honorable  in  all  nations 
and  all  ages  of  the  world,  up  to  a  competency  and  an  independence,  and  to 
command  the  respect  of  mankind  wherever  they  are  known.  What  in 
their  characters,  what  in  their  lives,  what  in  their  dealings  with  their  fel- 
low men  that  should  lead  us  to  infer  that  in  their  dealings  wn'th  the  Gov- 
ernment of  the  United  States  there  is  any  such  mysterious  and  malign 
spell  upon  them  that  we  cannot  fix  our  laws  so  plainly  and  the  machinery 
for  their  execution  so  simple  that  they,  as  others,  can  walk  into  our  courts 
and  feel  that  whether  the  judgment  be  for  or  against  them  that  judgment 
is  a  righteous  and  a  just  one,  commanding  their  respect  as  well  as  their 
obedience?  On  the  other  hand,  this  very  system  itself  has  just  precisely 
the  opposite  effect.  It  teaches  merchants  to  devise  means  of  evading  the 
law  and  the  administration  of  it.  The  result  is  to  drive  high  minded  and 
high  toned  merchants  out  of  business,  and  their  places  are  taken  by  that 
class  who  take  their  chance  in  the  world  even  by  a  violation  of  the  law 
for  the  profit  which  in  the  long  run  th^-y  think  it  will  yield,  or  it  drives  the 
importing  business  of  this  country  into  the  hands  of  foreigners,  who  from 


172  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

the  other  side  of  the  water  send  their  goods  here  to  irresponsible  con- 
signees, who  have  nothing  to  lose  and  therefore  nothing  to  fear.  Such  is  the 
result  fast  coming  to  be  the  common  law  in  the  mercantile  community  of 
this  country  under  the  system  this  bill  hopes  to  remedy.  The  wise,  pru- 
dent man  is  seeking  some  other  calling  or  absolute  retirement  rather  than 
submit  himself  to  the  chances  of  accident  and  mistake  that  are  inseparable 
from  a  complicated  system,  administered  by  men  whose  interest  it  is  to  let 
them  pass  into  the  grasp  of  the  law,  into  the  mistakes  and  pitfalls  the  law 
itself  has  dug  for  them,  in  order  that  the  fruits  thereof  may  come  into  their 
own  coffers.  It  is  a  source  of  revenue  that  debauches  the  wjjole  customs 
service  of  the  country. 

Men  abandon  honest  callings  that  bring  them  a  moderate  compensation, 
and  seek  an  employment  that  brings  them  these  large  returns.  A  man 
who,  in  the  short  time  we  have  been  here,  has  gathered  as  his  share  of  the 
moieties  somewhere  in  the  neighborhood  of  $400,000,  was  tempted  from  a 
quiet  village,  not  many  hundred  miles  from  New  York,  where  he  was  pur- 
suing an  humble  calling  which  yielded  him  a  moderate  compensation,  to 
tender  his  patriotic  services  to  the  Government  of  the  United  States  in  the 
capacity  of  a  Treasury  agent,  in  which  he  could  act  as  informer.  He  now 
goes  back  to  his  native  village,  builds  houses  and  stores,  and  steeples  rise 
up  there  on  which  is  written  "  The  wages  of  an  informer." 

Men  leave  the  revenue  service  of  the  country,  and  when  we  ask  them 
why  they  do  it,  they  say  they  could  not  afford  to  stay  there  at  that  com- 
pensation. When  we  ask  them  what  they  do  now,  they  say  that  they  have 
gone  into  the  business  of  collecting  the  revenues  of  the  country  at  the 
halves.  Everything  now  is  being  tal^en  at  the  halves;  fifty  per  cent,  is 
the  common  compensation  when  you  deal  with  the  Government.  There 
are  men  who  have  gone  into  a  systematized,  organized  association,  who  go 
around  this  country  and  inform  honest  bondholders  that  there  is  interest 
due  them  here  at  the  Treasury  Department,  that  it  is  pretty  difficult  to  col- 
lect it,  and  they  will  collect  it  for  them  at  fifty  cents  on  the  dollar.  Hun- 
dreds of  thousands  of  dollars  of  interest  money  has  been  taken  every  year 
out  of  the  Treasury  of  the  United  States  by  these  men,  who  have  turned 
their  backs  on  honest  callings  and  devote  themselves  to  this  fifty  per  cent, 
business. 

The  official  service  of  the  United  States  is  being  sapped  and  mined,  and 
no  such  thing  as  a  healthy,  honest  public  service  for  fair  and  reasonable 
compensation  in  the  revenue  service  of  the  country  can  long  be  maintained 
unless  reform  something  like  this  radical  change  in  the  administration  of 
the  Government  shall  be  adopted. 

It  does  not  stop  with  Jaync,  nor  with  Sanborn,  nor  with  men  of  that 


AN  KXTRAORDINARY  HISTORY. 


173 


clasp.  It  {spreads  like  a  contagious  disease,  and  every  official  who  comes 
in  contact  with  these  men,  or  with  this  service,  becomes  uneasy  in  his  call- 
ing, unwilling  to  toil  as  he  has  done,  and  therefore  he  turns  his  back  upon 
an  honest  and  honorable  position  the  moment  he  can  find  an  opportunity 
to  fill  his  pockets  under  this  system  of  revenue  service,  which  has  existed 
now  for  the  last  ten  or  fifteen  years,  growing  every  year  in  the  enormities 
of  the  amounts  gathered  in  by  these  men,  like  a  ball  of  snow  rolled  up  little 
by  little,  until  it  becomes  the  great  and  overshadowing  complaint  that 
is  now  presented  by  this  report  of  your  Committee. 

VERDICT  OF  THE  HOUSE  OF  REPRESENTATIVES. 

At  the  conclusion  of  the  debate,  which  was  participated  in  by  Messrs. 
Wood,  of  New  York;  Burchard,  of  Illinois  ;  Niblack,  of  Indiana,  and  Kasson 
of  Iowa  (all  members  of  the  Ways  and  Means,  and  all  speaking  in  suppoit 
of  the  action  and  report  of  the  Committee),  the  bill  was  amended  by 
striking  out  that  portion  which  gave  the  district  attorney  power  to  com- 
pel the  production  of  books  and  papers,  and  in  one  or  two  unimportant 
particulars.  Aiid  then  the  Bouse  of  Representatives  gave  its  verdict  on  the 
character  of  the  transactions  reviewed;  the  action  of  Jayne  and  his  associates; 
and  the  treatment  of  the  firm  of  Phelps,  Dodge  <£:  Co.  and  other  merchants  by 
the  Government,  by  pa.s.su?^  the  bill  without  one  dissenting  voice  or  vote  ;  a 
result  almost  unprecedented  in  the  annals  of  American  Congressional  Legis- 
lation. 


THE  MOIETY  SYSTEM. 

PASSAGE  OF  MR.  ROBERTS*  BILL  BY  THE  HOUSE 
OF  REPRESENTATIVES — A  TRIUMPH  OF  THE 
MERCHANTS — ARRAIGNMENT  OF  CpSTOM 
HOUSE  OFFICIALS  AND   INFORMERS. 

[N.  Y.  Tribune,  May  20, 1874.] 

The  prompt  passage  by  the  House  of  the 
Roberts  moiety  bill  to-day,  without  any  show 
of  opposition,  is  an  evidence  of  the  sensitive- 
ness of  members  to  pubhc  opinion,  as  well  as 
a  complete  endorsement  of  the  action  of  the 
Ways  and  Means  Committee,  in  exposing  the 
odious  and  oppressive  operations  of  the  horde 
of  spies  and  informers  who  have  made  the 
New  York  Custom  House  api>ear  like  a  den  of 
robbers  to  the  merchants  of  that  city.  Al- 
though the  whole  day  was  occupied  by  debate 
upon  the  bill,  there  was  not  a  single  speech 
made  against  it ;  even  Gen.  Butler  held  his 
peace,  seeing,  how  useless  it  would  be  to  try 


to  stem  tlic  current.  Mr.  Roben.s  .'^pccch  wa.s 
an  admirably  clear  statement  of  the  evils  of 
the  moiety  system,  and  of  the  effect  of  tlie  re- 
form proposed  by  the  pending  bill.  ^Summari- 
zing its  provisions,  he  said  that  the  bill  swept 
away  arbitrary  processes  for  tlie  seizure  of 
books  and  papers,  abolislied  the  moiety  sys- 
tem, and  substituted  for  it  moderate  rewards, 
provided,  instead  of  a  forfeiture  of  the  entire 
invoice  in  the  case  of  under  valuation,  a  for- 
feiture only  of  the  article  under  valued,  and  a 
fine  of  not  exceeding  $5,000,  and,  in  case  of 
the  omission  of  any  charges  going  lo  make  up 
the  value  of  an  article,  a  penalty  of  double  the 
value  of  the  article.  The  object  of  the  meas- 
ure in  brief  was,  he  said,  to  make  all  penalties 
so  moderate  as  to  be  certain,  j.nd  to  make 
their  collection  the  result  of  law,  and  not  de- 
pendent upon  the  favor  or  vengeance  of  any 
officer. 

Mr.  Beck,  speaking  as  a  democrat,  was  nat- 
urally more  severe  than  Mr.  Roberts  upon 
Jayne  and  his  tribe.     With  the  materials  fur- 


174 


CONGRESS  AND  PHKLPS,  DODGE  &  CO. 


nished  by  the  testimony  taken  by  tlie  commit- 
tee he  drew  a  striking  sketch  of  Jayne  sitting 
in  his  dismal  httle  den,  where  the  gas  hght 
burned  .all  day,  setting  forth  the  terrors  of  the 
law  while  dangling  a  pair  of  handcuffs  before 
the  victim  who  had  fallen  into  liis  clutches, 
and  occasionally  trying  them  upon  his  wrists 
to  increase  the  terror  of  the  poor  merchant, 
until  he  had  frightened  him  into  complying 
with  his  demands.  Another  sketch  was 
equally  graphic- and  effective;  he  pictured  Mr. 
Wm.  E.  Dodge  appearing  before  Jayne  and 
the  Custom  House  chiefs,  all  assembled,  with 
Butler  as  their  counsel  and  Senator  Conkling 
seated  at  Lafiin's  elbow,  expounding  the  stat- 
utes and  declaring  that  the  whole  invoice  was 
forfeited,  but  advising  his  friends  to  take  less 
than  the  penalty  of  $500,000,  upon  which 
they  were  insisting.  Messrs.  Roberts  and 
Kasson  declared  that  the  testimony  of  Mr. 
Dodge  did  not  warrant  the  statement  that 
Conkling  was  acting  as  counsel  of  the  Cus- 
tom House  officials ;  but  Mr.  Beck  had  a  part 
of  the  testimony  read  where  Mr.  Dodge  ap- 


plied the  terra  counsel  very  explicitly  to  the 
Senator.     Jn  reply,  Mr.  Kasson  produced  Mr. 
Dodge's  last  testimony,  in  which  the  witness 
stated  his  belief  that  Mr.  Conkling  was  pres- 
ent by  accident,  and  had  no  pecuniary  inter- 
est in  the  case.    Finally,  Mr.  Dawes  came  up, 
apparently  as  a  reinforcement  to  the  Senator's 
I  defenders,  with  an  extract  from  Judge  Davis' 
I  testimony,  which,  when  read,  proved  to  be 
I  more  damaging  than  helpful  to  their  cause, 
for  it  showed  that  Mr.  Conkling's  interpreta- 
tion of  the  law  was  all  against  Phelps,  Dodge 
&  Co.,  and  in  favor  of  Jajme. 

Speeches  followed  byM  essrs.  Kasson,  "Wood, 
Niblack  and  Burchard,  and  at  the  close  of  the 
debate  Mr.  Dawes  took  the  floor  and  created 
something  of  a  sensation  by  attacking  the 
corruptions  of  the  Custom  House,  and  giving 
the  Administration  a  few  of  his  dexterous  and 
peculiar  back  handed  slaps. 

The  passage  of  this  bill,  especially  with  the 
omission  of  the  third  section,  is  a  great 
triumph  for  the  importing  merchants  of  the 
Atlantic  seaboard. 


ACTION  OF  THE   SENATE. 


The  bill  as  passed  the  House  came  before  the  Senate  for  consideration 
on  the  9th  of  June,  when  a  strenuous  effort  was  made  by  the  representa- 
tives of  the  Custom  House  interest  to  modify  its  essential  features  by 
amendments,  which,  if  adopted,  would  practically  have  rendered  the  bill  of 
but  little  value  as  a  measure  of  relief  and  reform.  All  eflTorts  in  opposition 
to  the  tide  of  public  opinion,  however,  proved  futile,  and  the  Senate  after 
three  days'  discussion,  and  rejecting  every  amendment  essentially  hostile  to 
the  objects  sought  for  by  the  mercantile  community,  passed  the  bill  on  the 
llth  of  June,  with  only  three  votes  recorded  in  the  negative — Howe,  of 
Wisconsin;  Flanagan,  of  Texas;  and  Pease  of  Mississippi. 

The  bill  was  subsequently  signed  by  the  President  and  became  a  law. 


The  following  article,  entitled  "  Tlie  Senate  and  the  JfoiV<iesi?i7/,"  appeared 
in  the  New  York  World  immediately  after  the  passage  of  the  bill  (ai 
amended)  by  the  Senate; 


"  The  World's  special  despatch  on  the 
Moiety  Bill,  printed  Thursday,  told  the  story 
of  a  victory  won  for  the  merchants  m  tlie 
United  States  by  democratic  aid  and  perse- 
verance. This  victory  is  at  present  of  the 
greatest  significance. 

We  have  time  and  again  exposed  the  otit- 
rages  worked  by  the  revenue  acts  of  1863 
and  1867.  It  wtis  not  the  moiety  clause 
alone  that  was  involved,  for  that  abuse  was 
the  offspring  of  our  tariff  laws  generations 
liefore.  The  Acts  of  186.3  and  1867  intro- 
duced espionage  into  the  Republic.  They 
were  acts  that  the  best  lawyers  held  uncon- 
stitutional, because  they  allowed  the  seizure 
of  books  and  papers  for  the  purpose  of  mak- 
ing a  merchant  crimmate  himself. 

All  that  was  requisite  to  perfect  the  sys- 
tem was  to  get  the  instruments  to  carry  it 
out.  These  were  found.  Men,  fearless  and 
unscrupulous,  were  appointed  to  carry  out  a 
hateful  law.  The  consequences  are  too  fresh 
in  people's  minds  to  need  recitation.  For 
nearly  ten  years  a  hateful  system  of  espion- 
age was  carried  out  in  the  United  States. 
No  trader  could  be  sure  that  his  counting 
house  or  his  store  did  not  contain  a  spy  hired 


by  the  Government  special  agent  to  betray 
the  trust  of  his  employer.  No  reputation 
was  too  high,  no  fortune  too  colossal  for 
Jayne  and  liis  emissaries  to  attack.  We 
need  not  stop  to  condemn  Jayne.  He  was 
but  the  fitting  tool  employed  under  a  law  for 
which  the  party  in  power  is  alone  responsi- 
ble, that  affected  the  business  of  the  whole 
country.  Well  may  a  whole  country  be  trou- 
bled when  its  commerce,  embracing  some 
thirteen  hundred  millions  annually,  is  handed 
over  to  the  inspection  of  official  spies. 

We  are  bound  to  admit  that  the  evils  of 
smuggling  and  under  valuations  are  more  com- 
mon in  the  United  States  than  in  any  other 
country  on  the  globe.  These  evils  are  insep- 
arable from  the  high  duties  we  exact  They 
are  evils  growing  out  of  evils.  When 
foreign  silks  were  entirely  prohibited  in  Eng- 
land the  enlightened  Mr.  Huskisson  pointed 
out  in  the  House  of  Commons  tiiat  three 
fourths  of  its  members  wore  some  article  of 
foreign  silks  on  their  persons.  It  is  in  hu- 
man nature  that  the  greater  the  gain  the 
greater  risk  will  people  run  in  obtaining 
the  reward.  Macaulay  well  pointed  out  that 
the  most  stringent  laws  against  clipping  the 


176 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


coin  of  England  only  increased  the  evil.  So 
wo  liavo  seen  that  no  terror  of  the  revenue 
law,  no  confiscation,  stopped  smuggling  or 
under  valuations  in  the  United  States. 

We  also  subnnt  that  in  the  eleven  years 
during  which  this  hateful  law  has  been  on  the 
statute  books  hardly  any  collusions  with  cus- 
toms otticiais  have  l)een  punished.  As  Jayne 
complained  before  the  Congres-sional  Commit- 
tee, the  thieves  are  left  in  office,  and  he  (even 
Mr.  Jayne,  observe,)  was  forced  to  quit  it.  The 
fact  is,  detectives  aid  not  search  lor  evidence 
of  guilt  in  the  places  where  it  could  easily  be 
louuU.  It  was  not  the  appraiser's  oinces 
which  V  ere  put  under  surveillance.  What 
appraiser,  what  subordinate  officer  during  the 
iast  eleven  years  has  been  sent  to  the  estate 
prison  for  collusion  in  defrauding  the  Treas- 
ury ?  These  men  were  rewarded  for  their 
own  thefts,  and  shared  in  many  cases  the 
inlbrmer's  moiety.  Weigliers  suspected  by 
Jayne  were  put  on  the  watch  and  gaya  up 
tneir  principals,  the  merchants.  Jayne  be- 
came tlie  iuiormer,  made  the  merchants  pay, 
and  not  only  let  the  dishonest  weigners 
escape  but  rewarded  them  besides,  ^igain, 
the  infamous  spy  system  in  the  stores  of  mer- 
chants threatened  to  become  stated,  because 
lawyers  of  repute  and  national  legislators 
took  the  spies  under  their  protection.  When 
the  thief  who  stole  a  Itrm's  letters  and  papers, 
and  informed  against  it,  was  rewarded  witn 
$65,000,  he  found  imitators  by  tlie  score,  and 
the  proudest  and  most  straightforward  mer- 
chants trembled  before  tlieir  own  servants. 

t>ystematic  under  valuation  and  smuggling 
rtourished  under  Air.  Jayne's  nose.  Jayne 
himself  admitted  the  fact.  The  many  mil- 
lions squeezed  from  merchants  did  not  come 
out  of  the  pockets  of  those  who  had  cheated 
the  Treasury  out  of  hundreds  of  thousands  of 
dollars,  ho.  They  came  from  mercantile 
houses  which  were  in  default,  one,  two,  or 
three  thousand  doUais.  Najdor  &  Co.  have 
now  a  suit  pending  in  which  the  under  valua- 
tion is  $100,  and  the  suit  calls  lor  a  quarter 
of  a  million,  we  believe. 

The  laws  of  '63  and  '67  were  a  trap  lor 
merchants.  Under  these  laws  the  juries 
were  invariably  charged  by  tne  judges  that 
the  intt7d  to  defraud  was  not  for  them  to 
decide ;  all  they  had  to  say  was  whether  a 
violation  of  the  law  had  taken  place  (as  tech- 
nically it  always  had) ;  that  the  intent  must 
bo  lelt  to  the  decision  of  the  Secretary  of  the 
Treasury,  who  would  perhaps  graciously  re- 
mit tfie  hue.  The  result  has  shown  that  the 
prudent    merchants     shrunk    from    Cust<jm 


House  lawsuits,  and  preferred  to  pay  hun- 
dreds of  thousands  in  tines.  Rumors  of  these 
tyrannical  abuses  were  rife  in  1871-72.  A 
fcenate  Committee  to  investigate  them  was 
sent  to  New  York,  and  sat  in  Washington. 
Messrs.  Buckingham,  Pratt,  Howe  and  btevv- 
art  declared  that  all  the  reports  were  exag- 
gerated ;  that  trivial  abuses  were  inseparable 
irom  the  stringent  execution  of  the  revenue 
laws.  Ju  fact,  they  plied  the  whitewash 
brush  with  great  vigor.  Two  democrats  on 
that  committee,  Messrs.  Bayard  and  Casserly, 
in  a  minority  report  pointed  out  the  abuses  of 
tho  law,  the  tyranny  and  robbery  that  were 
carried  on  under  the  liag  of  the  United 
States.  We  printed  last  luesday  a  portion 
of  Mr.  Bayard's  examination  of  Jayne  and  the 
remarks  of  the  committee.  Testimony  in 
1672 — which  has  been  found  but  too  true  hi 
1874 — told  how  the  spy  system  flourished  in 
the  land. 

But,  as  the  Presidential  election  was  at 
hand,  the  Schultzes  and  Dodges  had  time  to 
consider  or  ponder  over  the  minority  report  of 
Bayard  and  Casserly.  The  rlielps,  JJodge  ic 
Co.  outrage,  soon  followed  by  the  case  of 
Messrs.  Woodruff  &  Kobinsou,  roused  the 
hitherto  secure  merchants,  and  a  burst  of  in- 
dignation which  was  almost  universal  was  the 
result. 

We  need  not  follow  the  vicissitudes  of  the 
Moiety  Bill.  It  is  well  known  that  Messrs. 
Beck,  Wood  and  isliblack  were  the  liercest 
denouncers  of  the  nationil  scandal,  both  in  the 
Ways  and  Means  Committee  and  in  the 
House,  ihe  bill,  however,  had  a  multitude 
of  friends  in  the  House.  In  that  assembly  it 
was  a  question  of  Butler  and  tyranny,  or  jus- 
tice to  commerce,  and  so  high  did  the  indig- 
nation run  that  even  Butler  had  nothing  to 
say  in  favor  of  retaining  the  spy  system. 
N  ot  so  in  the  Senate. 

Mr.  Conkling  has  with  Christian  resignation 
swallowed  some  humiliating  remarks  made  by 
Mr.  Beck,  not  to  his  advantage,  and  he  may 
hear  even  more  hereafter.  Mr.  Conkling  did' 
his  utmost  to  defeat  the  bill.  He  was  sec- 
onded by  Howe,  Pratt,  Chandler,  Sargent, 
Stewart,  Buckingham,  Hamlin,  and  a  few 
more  of  that  class.  Senator  Sherman,  who 
had  the  hill  in  charge,  was  but  a  lukewarm 
friend  to  it.  And  the  bill  would  have  failed 
in  the  Senate,  as  three  measures  of  relief  had 
done  before,  had  not  one  man  used  his  indom- 
itable energy,  perseverance  and  tact  to  carry 
the  measure.  To  Senator  Bayard  chiefly  the 
merchants  are  indebted  for  the  success  of  the 
bill. 


DEBATE   IN  THE   SENATE 


REMARKS  OF  SENATOR  SCOTT. 

In  the  course  of  the  debate,  on  propositions  to  restore  to  the  officials  of 
the  Government  the  power  to  seize  and  examine  a  merchant's  books  and 
papers  and  otiierwise  amend,  Mr.  Scott,  Senator  from  Pennsylvania,  said  : 

Mr.  President,  as  the  chairman  of  the  Committee  has  already  stated,  this 
section  received  as  much,  if  not  more  consideration  in  Committee  than 
any  other  section  of  the  bill  ;  and  I  dusire  to  say  a  few  words  both  upon 
the  section  itself  and  upon  the  general  subject  which  has  given  rise  to  it. 

I  think,  as  the  Senator  from  Iowa  has  said,  we  are  perhaps  in  danger 
of  going  to  extremes  upon  both  sides  of  this  question  in  consequence  of 
recent  events.  Public  feeling  has  been  very  much  excited  over  the  allega- 
tion that  books  and  papers  have  been  arbitrarily  seized  with  bad  motives 
in  many  cases,  and,  on  the  other  hand,  complaint  is  made  that  dishonest 
])crsons  have. violated  the  revenue  laws,  against  whom  no  penalties  can  be 
enforced  unless  there  can  be  just  such  an  arbitrary  seizure  as  is  complained 
of.  I  think  there  have  been  many  violations  of  the  revenue  laws  which 
have  never  been  detected  or  punished  ;  but  I  do  not  agree  that  it  is  neces- 
sary, in  order  to  reach  them,  that  arbitrary  seizures  should  be  resorted  to. 

The  principal  case  out  of  which  this  feeling  has  arisen  has  been  gener- 
ally denounced  as  an  arbitrary  seizure  of  books  and  papers.  I  refer  to  the 
case  in  which  the  books  of  Phelps,  Dod}^  &  Co.  were  inspected  in  New 
York;  and  for  the  purpose  of  ascertaining  the  true  position  both  of  the 
man  who  has  been  denounced  for  that  seizure  and  of  the  firm  which  is 
alleged  to  have  been  wronged  by  it,  I  have  looked  into  the  testimony  re- 
lating to  the  production  of  those  books  ;  and  I  deem  it  my  duty  here  to  do 
justice  to  both  parties  involved  in  that  transaction,  and  in  the  light  of  its 
facts  make  the  effort  to  determine  what  legislation  is  required  by  true 
public  policy. 

No  man  in  this  country  enjoys  a  higher  reputation  than  William  E. 
Dodge,  and  I  hold  that  it  is  hardly  worth  while  for  a  man  to  make  a  good 
reputation  through  a  long  life,  unless  he  is  to  get  the  benefit  of  it  both  in 

12 


178  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

his  private  affairs  and  wlicn  arraigned  as  a  wrong-doer  before  tlie  public. 
It  would  take  a  very  strong  statement  from  any  quarter,  sustained  by  the 
most  undoubted  evidence,  before  I  would  be  willing  to  impute  for  a  mo- 
ment any  actual  or  intended  vioiation  or  evasion  of  the  laws  of  Ins  country 
by  a  man  who  has  sustained,  and  who,  as  I  believe,  has  deserved  the  repu- 
tation which  Mr,  Dodge  enjoys. 

But,  Mr.  President,  upon  looking  at  the  transaction  by  which  it  is 
alleged  a  great  wrong  upon  him  was  perpetrated,  I  find  that  his  books 
were  not  seized,  in  the  ordinary  sense  of  that  word,  at  all  ;  but  the  special 
agent,  Jayne,  whose  acts  have  been  the  cause  of  so  much  public  comment, 
looking  back  for  five  years  over  the  invoices  furnished  to  him  by  a  dis- 
honest clerk  in  the  house  of  William  E.  Dodge  &  Co.,  found  a  large  number 
of  under  valuations  upon  these  invoices,  as  was  alleged — under  valuations 
which  no  man  who  examines  the  whole  case  will  suppose  were  made  for 
the  purpose  of  defrauding  the  revenue.  The  same  books  from  which  those 
under  valuations  were  taken  would  have  shown  invoices  upon  which  over 
valuations  were  made  to  an  amount  as  large  as  the  under  valuations,  and 
the  firm  of  Phelps,  Dodge  &  Co.  there  is  no  doubt  paid  to  the  Government 
as  much  revenue  upon  the  over  valuations  in  their  invoices  as  the  Govern- 
ment was  deprived  of  by  those  which  had  under  valuations  in  them.  But 
this  clerk,  let  his  motive  be  what  it  might,  furnished  to  Jayne,  the  special 
agent,  the  invoices  which  showed  the  under  valuations,  withholding  those 
which  showed  the  over  valuations,  and  upon  the  face  of  them  Jayne  found 
that  the  firm  of  Phelps,  Dodge  &  Co.  would  be  liable,  upon  a  strict"  con- 
struction of  the  revenue  laws,  to  penalties  which  would  amount  to  about 
i>l, 750,000,  being  a  forfeiture  of  the  Avhole  valuation  of  all  the  invoices  in 
which  the  under  valuations  of  a  few  articles  had  occurred. 

Finding  this  to  be  the  case  a  suit  was  instituted,  and  notice  sent  to  Mr. 
Dodge  of  what  this  agent  had  found.  It  came  upon  him,  as  he  says,  like 
a  thunderbolt;  and  no  man  can  wonder  that  it  did.  No  man  holding  the 
position  which  he  did  in  society  could  be  otherwise  than  alarmed  and 
astounded  at  being  charged  with  a  fraud  upon  his  Government  of  this 
extent.  He  went  into  the  presence  of  this  special  agent,  in  a  place  which 
he  describes  as  a  dark  hole  in  the  Custom  House,  lighted  up  by  gas,  and 
there,  with  the  district  attorney  present,  he  was  informed  of  what  was 
charged  against  his  firm— that  they  had  imported  goods  with  invoices  in 
which  under  valuations  occurred  that  would  make  them  subject  to  these 
penalties.  Mr.  Dodge  is  an  honorable  man.  He  averred  that  he  was 
guiltless  of  any  intention  to  defraud  the  Government;  but  upon  this  state- 
ment being  made  to  him  that  their  books  and  papers  would  show  this 
under  valuation,  and  a  charge  being  made,  according  to  his  statement,  in 


AN  EXTRAORDINARY  HISTORY.  179 

language  and  spirit  certainly  discreditable  to  this  man  Jayne,  and  under 
circumstances  calculated  to  inspire  terror,  he,  as  an  honorable  merchant, 
instead  of  awaiting  the  process  of  having  his  books  ordered  into  court, 
proffered  to  waive  all  the  formalities  the  law  required  and  place  his  books 
at  the  disposition  of  Mr.  Jayne  and  of  the  district  attorney.  They  were 
then  carted  away  from  his  store  without  any  judicial  order,  but  upon  his 
own  agreement  that  they  should  be  taken. 

Unwilling  to  go  into  court  where,  upon  .the  technical  letter  of  the  law, 
without  any  dishonc^st  intention,  his  firm  might  be  subjected  to  a  penalty 
of  over  $1,000,000,  smarting  under  the  allegation  of  fraud  which  was 
made  public  and  sent  abroad  to  Europe,  under  which  his  firm  there  was 
suffering,  under  which  one  of  the  members  was  suffering  in  reputation 
and  mentally — such  suffering  as  can  be  appreciated  only  by  a  high 
toned,  honorable  man,  who  has  had  his  character  blasted  before  the 
public — with  all  the  considerations  pressing  upon  him,  rather  than  go 
into  court  and  incur  the  risk  of  paying  a  penalty  of  $1,700,000  for  a  tech- 
nical violation  of  law  where  no  fraud  was  intended,  he  paid  a  penalty 
equal  to  the  actual  valuation  of  the  goods  upon  which  the  under  valuation 
took  place.  The  actual  valuation  of  the  goods,  remember;  not  simply  the 
duties  upon  them.  The  duties,  if  I  recollect  aright,  and  I  will  not  be 
responsible  for  exact  figures,  upon  the  whole  under  valuation  would  only 
have  amounted  to  $l,fiOO.  The  items  of  actual  under  valuation  amounted, 
in  a  business  of  five  years,  covering  between  three  and  four  hundred  mil- 
lions of  dollars,  to  only  about  $6,000,  upon  goods  which,  in  the  aggregate, 
amounted  to  $271,000,  and  the  case  was  compromised  by  paying  that 
amount 

Mr.  President,  it  was  a  gross  wrong;  but  the  wrong  was  in  the  law. 
We  are  seeking  to  remedy  it. 

Mr.  President,  I  am  not  here  to  apologize  for  this  man  Jayne;  I  am  not 
here  to  become  the  advocate  of  any  party  in  this  transaction;  but  I  am 
here  to  do  justice  to  both  these  parties,  and  to  see  what  provision  we  ought 
to  insert  in  the  public  law  for  the  purpose  at  the  same  time  of  protecting 
the  honest  merchant,  of  punishing  the  dishonest,  of  collecting  the  reve- 
nues, and  imposing  and  enforcing  the  penalties  and  forfeitures  that  are 
incurred  by  actual  intentional  fraud. 

REMARKS  OF  SENATOR  EOUTWELL. 

Mr.  President,  upon  the  general  question  of  abolishing  moieties,  I  ex- 
pressed an  official  opinion  more  than  four  years  ago,  in  my  Annual  Report 
as  Secretary  of  the  Treasury  to  Congress  in  the  year  1869.     1  thought  then 


180  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

tliat  1  foresaw  some  of  the  evils  tlmt  have  since  been  complained  of.  On 
the  25tli  of  May,  1870,  1  submitted  to  Conji^ress  a  bill  for  the  abolition  of 
the  moiety  system,  coupled  with  a  bill  to  establish  the  salaries  of  the  Cus- 
tom House  officers;  and  again  in  1870  I  urged  the  abolition  of  the  moiety 
system;  and  I  think  that  experience  lias  shown  that  either  of  those  years 
would  have  been  a  more  fortunate  time  for  the  consideration  of  the  subject 
than  the  present.  While  I  have  seen  many  things  and  experienced  a  good 
deal  which  would  lead  me  to  change  my  opinion,  nevertlieless,  I  adhere  to 
it  that  the  moiety  system  is  a  bad  system  and  ought  to  be  abolislied.  Nor 
is  tliat  opinion  derived  altogether  or  even  chiefly  from  what  are  alleged  to 
be  the  evils  under  which  the  commercial  community  suffers;  but  rather  on 
account  of  the  evils  that  it  brings  upon  the  administration  of  the  law,  and 
the  difficulties  and  dangers  to  which  those  who  are  called  t(\ administer  the 
law  are  exposed. 

I  have  been  reluctant  even  to  say  one  word  before  the  public  touching 
any  matter  concerning  which  I  have  been  officially  concerned,  and  1  do  not 
know  that  1  should  have  risen  to  say  a  word  this  morning,  except  for  the 
remarks  made  by  the  Senator  from  Pennsylvania.  I  have  no  judg- 
ment to  exi)rcss  as  to  the  character  and  conduct  of  the  firm  whose  name  he 
has  mentioned  in  the  presence  of  the  Senate;  but  I  wish  to  lay  before  the 
Senate  certain  facts,  which  1  think  relieve  not  partially  but  altogether, 
which  justify  not  only  with  qualification  and  apology,  but  without  qualifi- 
cation or  apology,  what  was  done  in  reference  to  the  claim  that  was  made 
upon  that  firm.  Personally,  1  have  nothing  of  which  1  can  complain.  I 
believe  that  the  senior  member  of  that  firm,  in  whatever  he  has  said,  either 
in  private  or  in  public,  has  been  altogether  favorable  to  the  part  1  had  in 
the  transaction  to  wiiich  public  attention  has  been  directed.  But  I  think 
that  the  vindication  of  the  course  of  administration  is  of  more  consequence 
than  the  vindication  of  any  private  person. 

Now,  what  were  the  facts  ?  Un  the  27th  day  of  December,  lb72,  or  per- 
haps a  few  days  prior  to  that  date,  a  person  who  had  been  in  the  employ 
of  this  house,  having  first  been  to  an  attorney  in  the  city  of  New  York  not 
in  any  way  connected  with  the  Government  or  representing  it,  came  to 
the  special  agent  and  laid  before  him  what  he  called  evidence  of  the  under 
valuation  of  goods  imported  by  this  house.  He  not  only  made  statements, 
but  he  presented  documents  which  went  to  show  the  truth  of  his  state- 
ments, and  when  these  documents  were  compared  with  the  books  of  this 
house,  when  they  had  been  surrendered  for  the  purpose  of  examination,  the 
evidence  was  conclusive  that  those  papers  had  not  been  tampered  with  in 
any  way;  that  they  were  originals;  that  they  were  genuine;  that  they  had 
been  taken  from  the  books  of  this  firm  by  this  man;  and  whatever  may 


AX  EXTRAORDINARY  HISTORY.  181 

have  been  liis  motive,  or  whatever  the  character  you  may  attribute  to  liim, 
it  has  never  been  proved — I  think  not  even  suggested,  but  if  suggested 
never  sustained  by  any  proof — that  the  agent  of  the  Treasury  Department 
had  any  knowledge  of  the  relations  of  this  unfaithful  clerk  to  his  house 
until  he  appeared  before  him  with  these  papers,  after  having  consulted 
with  counsel,  whom  he  had  privately  employed,  and  who  was  in  no  way 
connected  with  the  Government. 

What  was  this  special  agent  to  do  ?  I  have  before  me  a  statement  which 
contains  a  minute  of  thirty-six  shipments  of  goods — tin  plates — commencing 
early  in  Januar\%  1871,  ending  in  March,  1872;  tiiirty-six  shi|)iuents  upon 
different  vessels,  or  perhaps,  in  some  instances,  shipments  upon  the  same 
vessels  on  different  voyages.  Each  one  of  those  shipments  shows 
a  difference  between  the  Custom  House  invoice,  on  which  duties  were 
paid,  and  the  private  invoice,  in  the  same  handwriting  with  the  regular  in- 
voice presented  by  this  unfaithful  clerk  to  the  special  agent,  and  when 
compared  with  the  stubs  from  which  they  were  torn,  matched  exactly  with 
the  books  then  in  possession  of  the  firm;  and  when  these  books  were  given 
up  on  the  27th  day  of  December,  1872,  by  consent,  what  was  the  special 
agent  to  do?  Attribute  to  him  any  character  you  please;  he  had  his 
statement  before  him  of  thirty-six  shipments  of  tin,  with  a  public  invoice, 
found  at  the  Custom  House  with  a  private  invoice  in  the  same  handwriting, 
obtained  confessedly  from  the  books  of  this  establishment.  What  was  he 
to  do?  Can  anybody  say  that  he  was  to  do  anything  except  to  proceed 
in  the  regular  way?  If  he  had  done  otherwise  he  would  have  been  con- 
demned by  the  whole  country.  The  matter  was  laid  before  the  district 
attorney,  and  the  district  attorney,  acting  upon  his  authority,  not  as  an  ofli- 
cer  of  the  Treasury  Department,  but  as  an  officer  of  the  Department  of 
Justice,  instituted  regular  proceedings  for  the  recovery  of  what  was  alleged 
to  be  due  under  the  law  upon  a  computation,  not  at  the  will  of  any  officer, 
but  taking  the  facts  as  they  appeared,  they  proceeded  to  compute  and 
establish  and  ascertain  the  legal  liability  of  the  defendants. 

Mr.  Camerox. — Will  the  Senator  from  Massachusetts  allow  me  to  ask  him 
a  question  ?  I  desire  to  know  if  that  agent  of  the  Treasury  Department  is 
the  same  officer  who  has  recently  resigned  his  place. 

Mr.  BouTWELL. — Certainly;  Mr.  Jayne — the  same  person.  I  do  not  speiik 
of  Mr.  Jayne  one  way  or  the  other,  either  in  defence  or  condemnation.  I 
only  state  the  facts.  Legal  proceedings  were  instituted  for  $271,000. 
About  this  time — I  cannot  say  what  the  precise  date  was — Mr.  l)o<lge 
called  upon  me  in  Washington  at  my  boarding  house,  out  of  office  hours, 
and  stated  in  general  the  difficulty  in  which  he  was  involved,  alleging  his 
innocence,  of  which  I  had  no  doubt,  excited  my  unreserved  syinp  ithy  upon 


182  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

the  represontation  lie  made  of  the  difficulty  in  which  his  house  was  involved, 
and  desired  to  pay  the  $271,000  at  once  and  have  tlie  whole  matter  disposed 
of  then  and  there.  I  said  to  liiin:  "This  is  an  impossible  thing;  an  impro- 
per, u  very  unwise  thing  for  you  to  think  of."  Upon  his  assertion  of  his 
innocence,  I  gave  him  what  I  thought  was  legal  advice,  and  good  advice,  so 
far  as  I  could  give  advice  us  a  public  officer.  I  said  to  him:  "If  your 
statements  be  true,  as  I  have  no  doubt,  you  are  in  no  danger  either  as  to 
money  or  reputation.  Go  into  court  where  the  testimony  can  be  taken 
under  oath  and  according  to  the  forms  of  law.  The  Secretary  of  the  Treas- 
ury has  no  power;  he  cannot  take  testimony;  he  cannot  form  a  legal  judg- 
ment. Tills  case  can  only  be  disposed  of  properly  in  the  judicial  tribunals 
of  the  country,  and  if  it  shall  turn  out,  as  I  have  no  doubt  it  will,  that  these 
are  technical  departures  from  the  law,  and  do  not  involve  any  criminal 
intent,  the  court  will  so  certify;  and  the  Secretary  of  the  Treasury,  under 
the  statute,  then  has  power  to  remit  the  penalty  in  whole  or  in  part,  and 
such  things  are  frequently  done."  Mr.  Dodge  has  said  since  that  I  gave 
him  good  advice.  I  gave  him  such  advice  as  I  thought  a  man  in  his  situ- 
ation should  take.  He  came  a  second  time  and  I  repeated  the  advice  to 
him,  but  declined  to  have  anything  to  do  with  the  adjustment  of  the  matter, 
as  it  was  in  the  courts  and  must  be  there  disposed  of. 

Mr.  Scott. — Will  the  Senator  from  Massachusetts  permit  me  ?  I 
would  be  glad  at  this  point  if  he  would  permit  me  to  read  Mr.  Dodge's 
statement  on  this  subject  and  giving  his  reason  why  the  advice  given  him 
was  not  followed. 

Mr.  BouTWELL. — I  have  no  objection  to  that  although  I  suppose  I  know 
the  reason. 

Mr.  ScoTT. — I  have  no  doubt  the  Senator  from  Massachusetts  will  be  glad 
to  have  this  read.     Mr.  Dodge  states  : 

And  now,  before  I  forget  it,  I  want  to  do  justice  to  a  Government  officer  who,  I  think,  is 
entitled  to  have  justice  done  him  in  this  case.  I  have  regretted  very  much  that  from  time 
to  time,  ever  since  the  settlement,  there  have  appeared  in  the  papers  certain  hints  which 
would  seem  to  indicate  that  the  Secretary  of  the  Treasury,  Mr.  Boutwell,  did  not  treat  us 
fairly  in  the  matter.  If  we  had  followed  Mr.  Boutwell's  advice,  we  probably  never  should 
have  paid  this  $271,000.  I  came  on  to  see  Mr.  Boutwell.  He  was  sick  at  his  house,  and 
was  kind  enough  to  receive  me  in  his  room.  I  stated  the  whole  case  to  him  as  well  as  I 
could  in  a  very  short  time,  and  I  told  Mr.  Boutwell  that  wo  had  looked  this  matter  over  with 
great  care;  that  if  it  was  a  matter  between  ourselves  and  the  Government,  or  if  it  was 
simply  a  matter  between  the  courts  of  the  United  States  and  ourselves,  and  if  it  were  not  for 
the  array  of  power  and  influence  which  was  behind  to  make  the  better  appear  the  worse, 
we  would  not  hesitate  to  go  into  court ;  but  for  us  to  go  into  court  and  have  a  judgment 
against  us  for  $1,750,000  and  have  it  telegraphed  all  over  the  world  that  the  Government  of 
the  United  States  had  sued  Phelps,  Dodge  &  Co.  for  fraud,  and  had  obtained  a  judgment  for 
that  amount,  whatever  might  be  the  result  afterward,  the  injury  to  us  as  merchants  would 


AN  EXTRAORDINARY  HISTORY.  183 

have  been  irreparable.  Because,  however  swift  the  fact  may  go  by  telegraph,  the  result  of 
an  after  investigation  would  be  very  slow  to  follow.  Mr?  Boutwell  said  to  mo,  "  Mr.  Dodge, 
I  think  you  had  better  go  before  the  court,  and  I  will  assure  you  that  if  it  comes  back  to  me, 
as  it  will  come,  whatever  may  be  the  decision  of  the  court,  I  will  give  the  matter  personal 
and  careful  consideration."  I  thanked  him  for  it  He  knew  then  probably  what  I  did  not 
know,  but  which  if  I  liad  known  I  never  would  have  paid  the  money.  I  had  no  knowledge 
that  there  was  only  $1,600  involved  in  the  whole  case,  running  over  live  years,  and  covering 
importations  to  the  amount  of  $50,000,000. 

Ml*.  Boutwell. — I  did  not  know  anything  about  how  iiuich  was  involved. 
I  iiad  received  no  official  report  of  the  ca.se  at  tliat  time.  I  had  only  heard 
a  rumor  that  there  was  such  a  casi*. 

Following  these  interviews  there  was  a  correspondence  between  Mr. 
Dodge's  counsel,  Mr.  Wakeman,  of  New  York,  who  was  an  eminent  revenue 
lawyer,  who  had  been  I  think  four  or  five  years  Surveyor  of  the  Port,  and 
who  had  frequently  appeared  before  the  Department  in  revenue  cases,  and 
the  Treasury  Department  in  relation  to  the  adjustment  of  this  ca.se.  The 
first  proposition  made  was  dated  on  the  2d  of  January,  187^^,  and  the  two 
sub.sequent  propositioufi  bore  date  of  2d  January,  1873,  but  they  were  not 
mad<!  until  some  time  afterward.  They  seem  to  have  been  dated  back  to 
correspond  with  the  first  proposition.  This  first  proposition  was  a  propo- 
sition to  pay  $271,000,  and  was  coupled  witli  a  protestation  of  innocence, 
and  we  said  in  reply  that  it  was  impossible  for  the  Department  to  take 
mone^'  for  an  alleged  violation  of  the  revenue  laws  when  those  who  were 
charged  with  having  violated  them,  and  who  proposed  to  pay  money  upon 
such  charges,  themselves  protested  their  innocence,  that  the  Govern- 
ment could  not  take  money  from  hands  that  were  innocent  of  any 
intention  to  defraud  the  Government,  and,  therefore,  that  proposition  was 
declined. 

A  stcond  proposition  came  in  which  the  protestation  of  innocence  was 
omitted,  no  admission  of  guilt  inserted — but  the  protestation  of  innocence 
was  omitted  ;  and  while  that  proposition  was  under  consideration  it  was 
withdrawn  before  the  Department  had  acted  upon  it  or  come  to  any  con- 
elusion  as  to  what  should  be  done.  After  its  withdrawal  a  letter  was 
addressed  by  Mr.  Dodge  himself  to  the  Secretary  of  the  Treasury  saying 
that  he  had  been  informed  that  the  Secretary  had  already  reached  the  con- 
clusion to  accept  the  proposition,  and  inasmuch  as  they  had  made  the 
proposition  and  the  Department  had  concluded  to  accept  it,  he,  upon  the 
whole,  had  concluded  to  stand  by  it.  I  wrote  him  a  letter,  which  I  dictated 
personally,  saying  to  him  that  the  Department  had  come  to  no  such  con- 
clusion, that  indeed  the  facts  necessary  to  an  opinion  were  not  before  the 
Department,  and  that  his  withdrawal  of  his  proposition  was  entirely  con- 


184  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

fsistent  with  any  situation  of  the  question  as  far  as  the  Department  was 
concerned. 

But  following  that  at  an  interval  came  a  third  proposition  renewing  the 
offer  of  $271,000,  supported  as  all  the  others  were  by  the  recommendation 
of  the  district  attorney  of  the  Southern  District  of  New  York  in  favor  of 
accepting  the  proposition.  This  proposition  either  contained  the  sugges- 
tion or  condition,  or  was  accompanied  or  was  soon  followed  by  a  letter 
containing  the  condition  that  the  receipt  should  be  a  bar  to  all  claims  of  the 
Government  against  this  firm.  That  of  course  was  inadmissible.  We  said 
that  the  Department  could  only  accept  this  money  as  a  bar  in  any  civil 
suit  to  those  cases  which  had  been  examined  and  reported  upon;  and  that 
proposition  was  finally  accepted  in  the  amended  form,  as  I  understand, 
although  I  have  no  official  information  on  that  point.  The  suit  was  for 
$271,000  and  something  over,  and  they  consented  to  pay  exactly  what  the 
Government  asked.  This  was  not  a  sudden  thing.  The  proceedings  were 
instituted  on  the  2tth  of  December,  1872 — or  earlier  than  the  27th  of 
December,  for  the  books  were  delivered  on  the  27th  of  December.  The 
final  proceedings  took  place  the  very  last  of  the  month  of  Februar}',  1873. 
Something  like  two  months  or  more  elapsed  while  the  subject  was  under 
consideration.  There  was  no  pressure  from  the  Treasury  Department  upon 
this  house.  We  delayed,  we  resisted,  we  refused  propositions,  we  post- 
poned ;  they  had  time  for  consideration,  they  had  eminent  counsel,  they 
acted  upon  their  own  judgment 

Mr.  Howe. — Who  represented  them  ? 

Air.  BouTWELL. — Mr.  Wakeman-  for  one.  I  understood  other  counsel  were 
employed.  Mr.  Wakeman  was  an  eminent  revenue  officer,  and,  by  his  let- 
ters and  appearance  at  the  Department,  by  his  interviews  with  the  officers 
of  the  Department,  he  manifested  an  interest  in  the  affair  equal  to  any 
which  an  attorney  is  expected  to  exhibit. 

I  have  nothing  to  say  about  Phelps,  Dodge  &  Co.  with  reference  to  this 
matter.  I  can  understand  and  I  believe  Mr.  Dodge  himself  is  entirely  free 
from  any  personal  responsibility  in  this  matter.  I  cannot  doubt  it.  But 
there  is  a  mystery  connected  with  these  transactions.  Through  a  period 
of  more  than  a  year  there  were  under  valuations,  invoices  given  at  the 
Custom  House  on  which  duti.^s  were  paid  which  did  not  correspond  with 
private  invoices  in  the  books  of  this  firm.  Therefore,  while  I  do  not  judge 
them,  I  cannot  oiler  anything  in  their  defence:  but  I  do  say  that  the  Treas- 
ury Department  exhil)ited  moderation  and  consistency.  It  extended  to 
them  not  only  the  leniency  which  a  merciful  administration  of  the  law 
would  allow,  but  the  Treasury  Department  did,  from  the  beginning  to  the 
end  of  the  transaction,  delay  and  postpone  the  payment  of  this  money,  for  I 


AN  EXTRAORDINARY  HISTORY.  185 

can  assure  the  Senate  and  the  country  that  for  myself  I  was  unwilling 
that  a  house  having  the  reputation  which  this  house  had  should  pay  into 
the  Treasury  of  the  United  States  $271,000.  But  what  was  to  be  done? 
After  they  had  had  two  months  for  consideration,  after  we  had  made  sug- 
gestions of  ways  in  which  this  subject  could  be  judicially  investigated, 
when  we  three  times  offered  to  do  what  the  officers  of  the  law  said  the  law 
required  should  be  done,  what  was  an  executive  officer  with  the  law  to 
do?  Was  he  to  say,  "This  money  shall  not  be  paid;  you  do  not  know 
your  own  business;  you  do  not  know  your  own  condition  ?"  After  two 
months'  delay,  after  they  had  the  benefit  of  eminent  counsel,  after  they  had 
had  suggestions  as  to  a  different  method  of  proceeding,  and  after  they  had 
not  only  been  invited  but  compelled  to  go  into  the  courts  by  the  officers  of 
the  law  and  a  way  pointed  out  to  them  by  the  Secretary  of  the  Treasury 
how  they  would  escape  from  every  penalty  if  the  Judge,  upon  the  hearing, 
should  say  there  was  no  criminal  intent  but  only  a  technical  violation  of 
the  law,  what  was  the  Treasury  Department  to  do  ? 

Mr.  President,  in  this  statement  I  have  done  more  than  I  designed  to  do. 
I  should  probably  have  said  nothing  except  for  the  remarks  made  by  the 
Senator  from  Pennsylvania;  but  I  believe  that  if  the  law  was  ever  honestly 
administered,  was  ever  mercifully  administered,  ever  administered  with 
reference  to  the  rights  of  the  defendants,  if  ever  defendants  were  cautioned 
and  put  upon  their  guard,  this  was  the  case  and  these  defendants  were  the 
parties. 

REMARKS  OF  SENATOR  EDMUNDS. 

If  the  Senator  will  allow  me,  in  the  direction  of  which  he  has  just  been 
speaking  about  the  adequacy  of  the  punishment  for  under  valuations,  etc., 
and  in  connection  with  the  case  of  Phelps,  Dodge  &  Co.,  which  is  the  cap- 
ital on  which  the  enterprise  of  this  bill  proceeds  in  the  business  of  legisla- 
tion, I  should  like  to  have  the  Secretary  read  from  the  official  copies  from 
the  books  of  Phelps,  Dodge  &  Co.,  voluntarily  surrendered,  as  it  is  here 
stated,  for  examination  on  the  27th  of  December,  1872,  the  record  which  no 
doubt  illustrates  the  strength  of  this  bill  in  protecting  the  innocent  virtue 
of  these  people  against  the  cruel  tyranny  of  the  officials  of  the  United  States 
better  than  any  amount  of  rhetoric,  even  from  the  mouths  of  the  distin- 
guished orators  who  support  this  bill,  can  do.  The  headings  are — and 
then  I  will  ask  the  Secretary  to  read  the  rest 

Mr.  Shkrmax. — I  think  to  have  a  long  document  read  and  interposed  in 
a  debate  like  this  is  raiher  outside  of  the  question.  I  want  to  reaffirm  what 
I  said,  and  to  prove  that  in  the  very  cases  cited,  taking  each  offence,  the 
twelfth  section  of  this  bill  provides  a  superior  penalty.  That  is  the  question 
between  us.     It  is  a  question  now  of  the  correctness  of  figures. 


I 

186  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

Mr.  Edmunds. — The  Senator  undoubtedly  will  have  time  for  that,  and  in 
order  to  aid  him  (because  I  must  do  good  to  him  even  against  his  will,  if  I 
have  the  right  to  do  that)  in  coming  to  this  question  of  accuracy,  I  will  give 
him  the  exact  entries  in  the  books  of  these  innocent  people,  whom  our 
agents  have  so  cruelly  wronged,  and  which  has  brought  forty  millions  of 
people  to  blush  with  shame,  I  believe  somebody  said,  in  order  that  he  may 
see  precisely  how  the  thing  occurred.  If  it  is  not  precisely  in  point,  as  it 
appears  to  me,  it  will  at  least  be — and  the  Senator  will  agree  with  me  so 
far — useful  in  another  way.  The  learned  Mr.  Saunders,  who  always  hated 
the  civil  law,  as  the  Senator  well  knows,  and  who  was  a  great  common  law 
lawyer,  in  arguing  a  great  case  one  day  before  the  court  of  king's  bench, 
found  it  greatly  to  his  advantage  to  cite  an  authority  from  the  civil  law; 
but  inasmuch  as  he  was  a  known  opponent  of  the  civil  law,  and  insisted 
that  it  ought  never  to  be  introduced  in  principle  or  practice  into  the  juris- 
prudence of  Great  Britain,  he  found  it  difl&cult  to  preserve  his  consistency 
in  referring  to  the  authority;  but  he  got  round  it,  as  the  Senator  from  Ohio 
would  on  a  similar  occasion,  alter  he  had  produced  his  Justinian,  or  his 
institute,  or  his  digest,  or  whatever  it  was,  by  saying,  "  If  it  please  your 
honors,  1  bring  this  to  your  honors'  notice,  not  as  an  authority  in  our  law, 
but  as  an  ornament  to  discourse."  [Laughter.!  Now,  if  this  inventory  is 
not  precisely  in  point  to  the  view  of  my  honorable  friend  from  Ohio,  cer- 
tainly it  will  be  a  flourishing  ornament  to  the  discourse  that  he  is  about  to 
make  about  the  virtue  of  Phelps,  Dodge  &  Co. 

Mr.  Sherman. — That  is  very  well  put. 

Mr.  Edmunds. — I  have  put  it  just  as  the  invoice  does;  it  has  two  faces. 
[Laughter.] 

This  invoice,  I  say,  is  the  real  genuine  thing,  as  it  appears  from  the  Treas- 
ury Department — a  statement  of  the  contents  of  the  books  of  Phelps,  Dodge 
&  Co.,  surrendered  by  them  voluntarily  in  the  exuberance  of  their  estab- 
lished virtue  for  examination,  between  the  25th  of  December,  1872,  and  the 
1st  of  January,  1878,  that  holy  Christmas  time  when  all  the  world  is  glad 
that  honor,  virtue  and  prosperity  are  spreading  themselves  all  over  the  world. 
It  is  headed  first  "date."  It  is  put  in  a  tabulated  form,  which,  to  be  sure, 
interferes  with  the  rhythmical  unity  which  thetr  ansaction  itself  so  really 
deserves  to  be  put  in;  but  it  is  put  in  tabulated  form  and  I  must  take  it, 
as  I  am  not  a  minnesinger,  as  it  is.  The  Senator  from  Ohio,  no  doubt, 
can  put  it  into  measure,  which  will  make  it  much  more  agreeaJble  reading 
than  it  is  now.  Here  it  is.  First  is  the  column  of  the  date  of  the  entries 
in  their  books.  Second  is  the  name  of  the  vessel  in  which  the  importation 
was  made.  Third  is  the  mark  which  each  package  had  put  upon  it  for 
identification.     Fourth  is  the  description  of  the  contents  of  each  package  of 


AN  EXTRAORDINARY  HISTORY.  187 

goods.  Fifth  is  the  Custom  House  invoice,  a  bland  and  delicious  name, 
implying  of  course  that  everything  is  public  and  fair,  that  the  open  door  of 
the  public  buildings  of  the  Government  where  the  appointed  officers  sit  at 
the  customs  are  to  be  emblazoned  by  this  statement  put  up  by  Phelps, 
Dodge  &  Co,  us  the  real  cost  of  their  property  which  they  had  brought 
into  the  country.  Then  next  comes  what  the  Senator  from  Ohio  may 
think  is  a  peculiarity,  the  private  invoice.  Next  comes  the  difference  in 
value  between  the  two,  and  then  the  total  amount  of  the  invoice. 

I  will  not,  of  course,  take  up  the  time  of  the  Senate  in  reading  it  clear 
through,  but  I  will  take  one  or  two  specimens  just  to  illustrate  how  it 
runs.  On  the  28th  of  January,  1871,  by  the  Cit}'  of  London,  came  a  pack- 
age marked  S  in  diamond,  and  carrying  an  Asiatic  name,  I  suppose.  I 
believe  the  island  of  Banca  furnishes  Bome  tin;  if  I  am  wrong  about  that 
my  honorable  friends  of  the  Finance  Committee  can  correct  me;  1  do  not 
l)rofess  to  be  wise  in  tin,  either  in  the  metaphorical  sense  of  dollars,  or  in 
the  commercial  sense  of  the  article  these  gentlemen  dealt  in;  but  the  word 
is  Pontymister,  and  I  suppose  it  to  be  a  manufactory  in  the  island  of 
Banca.  Very  likely  I  am  wrong,  but  if  so,  I  can  be  corrected.  Then  come 
the  goods,  "  ni  boxes  tin  plates  2  b  B.  T."  How  thick  that  is  the  Sena- 
tor from  Ohio  can  inform  us.  Then  comes  the  Custom  House  invoice,  and 
the  entry  in  pounds,  shillings  and  pence  is  jg531  15.s.  Od.  Then  comes  the 
"private  invoice,  iE548   13.s.  Oc?.;  difference  in  value,  i217  2s." 

Here,  then,  you  have  a  firm  of  people  whose  wrongs  are  to  be  redressed 
by  this  bill,  who  have  been  made  the  innocent  victims  of  a  cruel  and  ille- 
gal tyianny,  who  hold  out  to  the  United  States  and  swear  to  it  one  paper, 
which  affirms  that  the  cost  of  that  article  of  tin  was  j£531  lis.,  while  they 
receive  and  post  in  the  same  book  of  invoices,  so  that  the  two  are  brought 
side  by  side,  another  invoice,  which  is  the  true  one,  stating  that  the  cost  of 
that  article  was  jS548  13s.  In  one  hundred  and  seventy-one  boxes  of  tin  the 
cause  of  virtue,  and  good  morals  and  public  revenue,  and  the  progress  of 
society  require  the  virtuous  citizen  to  declare,  for  the  purpose  of  taxation, 
that  the  cost  is  one  sum,  and  for  the  purpose  of  his  private  gain,  to  have 
the  truth,  that  the  cost  is  a  greater  sum  by  £1*1,  and  to  swear  to  the  false 
invoice  as  the  true  one.  That  is  what  the  honorable  Senator  from  Ohio 
evidently  considers  to  bo  a  virtuous  example  for  a  good  citizen,  who  intends 
to  promote  the  welfare  of  trade  and  honesty  toward  his  brother  importers 
and  good  morals  in  society  everywhere,  to  set. 

Mr.  President,  I  did  not  rise  to  comment  upon  this  st)rt  of  thing.  I  am 
only  stating  the  case,  word  for  word  and  letter  for  letter,  according  to  the 
examination  of  these  books,  the  authenticity  of  which  was  not  questioned, 
surrendered  by  this  firm  itself,  where  the  members  of  the  firm  swear  to  the 


188  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Custom  House  officer  that  tlie  cost  was  one  sum,  when  by  their  own 
invoice  and  in  their  own  books,  side  by  side  with  it,  is  the  true  invoice, 
which  confessedly  was  the  true  sum,  a  great  deal  larger. 

Mr.  Sherman. — I  am  not  the  defender  of  Phelps,  Dodge  &  Co.  They  are 
not  my  constituents,  nor  have  I  anything  to  do  with  them.  'A  question 
arose  between  the  Senator  from  New  York  and  myself,  and  I  say  now  the 
penalty  recommended  by  Mr.  Stewart  is  exceeded  in  amount  in  this  partic- 
ular case,  taking  tliis  particular  case  that  is  used  by  the  Senator  from  New 
York  as  an  illustration  ;  that  in  each  case  the  penalty  provided  in  this  bill 
exceeds  that  proposed  by  Mr.  Stewart.  That  is  the  point  I  want  to  get 
at.  Take  each  of  these  oifences  of  which  Phelps,  Dodge  &  Co.  are  said  to 
be  guilty;  1  know  nothing  about  them;  and  I  say  the  penalty  Under  this 
bill  exceeds  that  suggested  by  Mr.  Stewart. 

Mr.  Eo^ruNDs. — The  Senator  says  he  is  not  the  defender  of  Phelps,  Dodge 
&  Co.  I  beg  to  know  if  I  am  mistaken  in  the  supposition  that  I  have  enter- 
tained that  this  bill  was  being  pushed  here  on  account  of  the  wrongs  that 
had  been  committed  by  the  Government  of  the  United  States  or  its  agents 
against  this  very  firm,  in  respect  of  these  transactions  among  others  ?  Will 
anybody  say  that  it  has  not  been  ?  I  should  not  have  dragged  the  name 
of  any  private  citizen  into  this  discussion,  however  guilt}"  he  might  be. 
The  tribunals  of  his  country,  if  he  had  found  it  convenient  to  submit  himself 
to  them,  would  have  been  able  to  ascertain  whether  he  was  guilty  or  not, 
and  I  should  have  been  the  last  man,  1  hope,  or  among  the  last,  who  would 
ever  have  referred  to  thb  guilt  or  innocence  of  anybody  who  might  be  sns. 
pected  or  charged  with  crime  in  a  place  where  he  could  not  have  the  oppor- 
tu!iity  to  answer  or  be  tried.  Bat  these  parties  not  being  in  court,  having 
got  out  of  court  in  a  way  that  we  all  understand,  right  or  wrong,  when  it  is 
said  they  are  virtuous,  and  that  the  law  as  it  stands  has  been  made  an  instru- 
ment of  tyranny  and  oppression  in  defrauding  innocent  citizens  of  their  just, 
and  constitutional,  and  business  rights,  then  I  am  forced  to  see  what  the 
truth  really  is. 

It  does  not  do,  therefore,  for  the  Senator  to  say  that  the  matter  of  Phelps, 
Dodge  &  Co.  has  nothing  to  do  with  this  business,  and  he  is  not  their 
defender.  He  is  promoting  this  bill  upon  the  ground  that  the  law  as  it 
stands  has  been  made  the  instrument  of  tyranny  against  these  men — that 
it  has  been  the  engine  of  oppression — not  because  the  law  as  it  stands  was 
right,  and  had  been  violated  by  the  acts  of  Jayne,  and  the  Secretar\^  of  the 
Treasury,  and  the  District  Attorney.  Nobody  contends  that  they  went  one 
step  beyond  the  law;  but  he  says  that  the  law  has  undertaken  to  interfere 
with  the  business  of  innocent  and  virtuous  citizens,  who  have  not  been 
guilty  of  any  violation  of  it,  unless  it  may  be   a  technical  one,  which  is 


f 

AN  EXTRAORDINARY  HISTORY. 


189 


pressed  to  their  disudyantage.  Tlierefore,  I  say  I  am  forced  to  point  to  the 
moral  of  what  was  so  well  said  by  the  Senator  from  New  York,  and  to  ask 
your  attention  to  the  undisputed  fact,  sad  as  it  is,  that  in  the  books  of  this 
company,  side  by  side,  systematically  placed  there,  are  found  invoices  of 
this  great  article  of  trade,  the  difiference  of  a  shade  in  the  price  of  which 
enables  a  great  house  to  command  the  trade  of  the  country  and  destroy 
that  of  their  competitors;  not  one  instance,  not  ten,  not  twenty,  but  a  hun- 
dred, where  there  is  this  continuous  falsehood  from  day  to  day  deliberately 
entered,  the  truth  upon  one  side  and  the  falsehood  upon  the  other;  the 
false  invoice  every  time  presented  and  sworn  to  ot  the  Department,  and  the 
true  one  every  time  i)laced  by  the  copy  of  the  false  one  in  the  books  of  this 
firm,  in  order  that  their  private  transactions  might  be  guided  by  it. 

If  this  is  the  virtue  that  the  Senator  defends  it  is  not  mine.  If  that  is  the 
public  prosperity  which  he  wishes  to  promote,  it  is  not  a  prosperity  in 
which  I  wish  to  share.  I  know  it  is  not  that  in  which  the  Senator  wishes 
to  share;  but  he  has  been  carried  away,  as  we  are  all  sometimes  carried 
away  on  the  wind  of  a  clamor,  and  in  order  to  overcome  clamor  he  destroys 
the  fiindamental  foundations  upon  which  Alexander  Hamilton  and  the 
fathers  of  the  Republic  placed  the  law  in  order  to  protect  innocence  and  to 
punish  vice. 


COMMENTS    OF  •TOE    PRESS    ON    THE    SPEECH    OF    SENATOR 

EDMUNDS. 

As  pertinent  to  the  subject,  attention  is  here  asked  to  the  following  review 
of  the  above  remarks  of  Senator  Edmunds,  which  appeared  in  the  columns 
of  the  New  York  Evening  Post,  June  15,  1874: 

'•The  Times  ih\n  morning  prints  nearly  a 
column  of  the  speech  which  Mr,  JOdmunds,  of 
Vermont,  made  in  the  Senate  on  the  10th  in- 
stant, during  the  debate  on  the  Moiety  Bill. 
The  essential  part  of  his  remarks,  however, 
is  not  given  by  the   Times. 

Senator  Edmunds  took  the  ground  that 
Messrs.  Phelps,  Dodge  »t  Co.  liad  defrauded 
the  Government  in  the  amount  of  tax  paid 
by  tliem  on  importations  of  tin.  He  was 
provided  with  a  list  of  what  ho  called  the 
'  invoices,'  under  which  the  requirements  of 
the  Custom  House  had  been  violated,  and 
from  this  list  he  selected  the  following  as 
a  specimen  of  the  nature  and  amount  of 
Messrs,  Phelps,  Dodge  &  Co.'s  alleged  fraud- 
ulent transactions : 

'  I  will  not,  of  course,  take  up  the  time  of 
the  Senate  in  reading  it  clear  through,  but  I 


will  take  one  or  two  specimens  just  to  illus- 
trate how  it  runs.  On  the  28th  of  January, 
1871,  by  the  City  of  London,  came  a  package 
marked  S  in  diamond,  and  carrying  an  Asiatic 
name,  I  suppose.  1  believe  the  island  of 
Banca  furni.^hes  .some  tin;  if  I  am  wrong 
about  that  my  lionorable  friends  of  the 
Fuiance  Committee  can  correct  me;  I  do  not 
profess  to  be  wise  in  tin,  t  ither  in  the  meta- 
phorical sense  of  dollars  or  in  tlie  connnercial 
sense  of  the  article  these  gentlemen  dealt  in  ; 
but  the  word  is  Pontymister,  and  I  suppose 
it  to  be  a  manufactory  in  the  island  of  Banca. 
Very  likely  I  am  wrong,  but  if  so  I  can  be 
corrected.  Tlien  come  the  goods,  '171  boxes 
tin  plates  2  b  B.  T.'  How  thick  that  is  the 
Senator  from  Ohio  can  inform  us.  Then 
comes  the  Custom  House  invoice,  and  the 
entry  in  pounds,  shillings  and  pence  is  £531 


190 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


1 1 8.  Od.  Then  comes  the  '  private  invoice, 
£548  13s.  Od. ;  difference  in  vahie,  £17  23.'" 

Senator  PJdniunds  assures  us  that  he  knows 
nothing  about  tin,  but  he  undoubtedl}'  fell 
confident — a  feehng  for  wliich  he  had  abund- 
ant reason — that  no  such  assurance  was  ne- 
cessary in  respect  to  his  acquaintance  with 
geography.  To  transfer  •'  Pontymister " 
from  Wales  to  the  Island  of  Banca  is  a  feat 
wliich  might  well  cause  an  elevation  of  the 
eyebrows  on  the  part  even  of  a  board  o^ 
Civil  Service  examiners. 

The  inexactness  which  appears  to  be  tlie 
leading  characteristics  of  Senator  Kdmunds's 
geographical  knowledge  is  equally  apparent 
wheu  he  speaks  of  the  documents  in  wliicli 
he  finds  such  conclusive  evidence  against  the 
business  integrity  of  the  house  of  Phelps, 
D  )dge  &  Company.  He  describes  these  doc- 
uments as  "  invoices,"  whereas  they  never 
have  been,  and  never  can  be  properly  re- 
garded as  "  invoices."  Tliey  are  suTiply  mem- 
oranda of  fag  ends  of  contracts  wliicli  were 
made  months,  and  some  of  them  a  fu  1  year 
before  the  documents  wese  written.  liut  we 
imagine  that  Senator  Edmunds  endeavored  to 
deliver  himself  Irom  all  such  criticisms  by  the 
general  confession  of  ignorance  which  lie  art- 
fully put  into  the  body  of  the  speech,  as  fol- 
lows :  "  Very  likely  1  am  wrong ;  but,  if  so, 
I  can  be  corrected  "  True;  but  when  a  Sen- 
ator of  the  United  States  undertakes  to  ex- 
amine a  specific  case  of  fraud,  aifecting  the 
business  credit  and  personal  reputiition  of 
the  firm  accused  of  having  committed  it,  it 
does  not  seem  to  be  unreasonable  to  require 
him  to  speak  with  a  moderate  degree  of  accu- 
racy. 

But  we  will  adjust  our  language  to  Senator 
Edmunds's  knowledge,  and  consider  his  facts. 
He  says  that  here  is  one  "  invoice  "  in  which 
the  amount  is  given  at  £531  Us.  and  another 
in  which  the  amount  is  given  at  £548  13s., 
the  diiference  between  the  two  amounts  being 
£17  2s.  The  first  is  sent  to  the  Custom 
House  and  the  other  is  not  seen  outside  of  the 


firm's  counting  room.  That  is  to  say,  in  an 
■'invoice"  of  £548  13s.  or  $2,743,  the  differ- 
ence between  tlie  contract  price  and  the  ac- 
tual market  value  amounted  exactly  to  £17 
2s.,  or  $85.50.  This  sum  of  $85.50  repre- 
sents the  amount  of  the  under  valuation,  on 
which  a  duty  of  twenty-five  per  centum  ouglit 
to  have  been  paid.  Twenty-five  per  centum 
of  S85.50  amounts  to  S21.37|,  and  that  is 
the  enormous  sum  which  Messrs.  Phelps, 
Dodge  &  Company  made  out  of  this  transac- 
tion. On  an  "  invoice  "  of  goods  valued  at 
$2,743  a  mercantile  house  of  fifty  years' 
standing,  which  transacts  business  annually 
to  the  amount  of  twelve  millions  of  dollars, 
saves  what  is  almost  exactly  three  quarters 
of  one  per  centum. 

One  requires  the  brain  and  the  conscience 
of  a  Jayne  to  see  in  this  transaction,  viewed 
merely  as  a  matter  of  business,  any  fraud. 
Tlierc  was  an  error,  we  admit,  but  there  was 
no  intention  of  cheating  the  Government. 
The  facts,  as  cited  by  Senator  Edmunds,  show 
that  there  was  no  motive  for  fraud.  Whether 
considered  as  money  kept  out  of  the  United 
States  Treasury  or  as  an  advantage  to  be 
gained  by  Plieips,  Dodge  (fc  Co.  over  their  fel- 
low merchants,  the  sum  of  $21  37^  is  too 
small  to  afford  the  shadow  of  a  suspicion  of 
an  intentional  violation  of  the  law.  These 
minute  errors,  covering  a  period  of  five  years, 
altogether  amounted  to  less  than  two  thousand 
dollars.  During  tho^  period  the  firm  trans- 
acted business  to  the  amount  of,  say,  fifty 
millions  of  dollars.  As  two  thousand  dollars, 
therefore,  is  to  fifty  millions  of  dollars,  so  is 
the  chance  that  Phelps,  Dodge  &  Company  in- 
tended to  cheat  the  Government. 

But  as  two  hundred  and  seventy-one  thou- 
sand dollars  is  to  nothing,  so  is  the  desire  of 
certain  Senators  for  the  "  sinews  of  war " 
hitherto  provided  by  the  Custom  House  for 
carrying  the  elections.  Senator  Edmunds's 
remarks,  as  published  in  the  Time.%  simply 
show  how  valuable  two  hundred  and  seventy- 
one  thousand  dollars  are  for  such  purposes." 


And  on  the  6tli  of  July  following,  the  statements  and  exhibit  of  Sena- 
tor Edmunds  having  been  again  brought  forward  in  the  House  by  Gen. 
Butler,  the  Evening  Post  again  resumed  the  discussion  of  the  same  sub- 
ject as  follows  ; 

*'  In  a  former  article,  in  discussing  this  case 
of  Phelps,  Dodge  &  Co.,  we  cited  an  illustra- 
tion of  the  iniquity  of  the  moiety  system. 
Four  shipments  of  that  firm,  wherein,  upon  a 
discovered  loss  to  the  revenue  of  $01.44,  they 
were  mulcted  to  the  amount  of  $5,530.33,  and 
were  hable  to  a  seizure  of  $107,749.42,  for 


which  whole  amount  Senator  Conkhng  ad- 
vised that  suit  should  be  brought  against 
them. 

As  additional  food  for  reflection,  in  refer- 
ence to  a  system,  the  reestablishment  of 
which  will  be  attempted  whenever  the  mer- 
chants relax  their  vigilance,  we  append  a  tabla 


AN  EXTRAORDINARY  HISTORY, 


191 


of  eight  additional  shipments  of  the  same  firm, 
as  exhibited  in  the  Senate  during  the  debate 
of  June  10,  in  which  Senator  Edmunds  made 
liis  cliief  argument : 

Table  of  eight  shipments  by  Phelps,  Dodee  &  Com- 
pany,  showing  the  amount  of  loss  to  the  Govern- 
ment in  revenue,  amount  of  the  invoices  confis- 
cated, and  the  grand  total  amount  liable  to 
seizure: 


1871. 
May  30 
Nem'i^is 
June  (i. 
CWash, 

Do. 

Do. 
June  14. 
C.Bklyn 
June  19. 
Caliibria 

Do. 

28th. 

China  .  • 

30th. 
Parthi.i. 
July  10. 
Algeria 
Aug.  14. 
.Mgeria. 

Do. 

Do. 

Do. 

Do. 


Total. 


S5i 

c  c 

o 

i| 


Mi 


^g 


Ojg 

n. 

is. 


\'o  o  o 


85 


108 


217. 


32: 


2l 
145 
56; 
1721 


$1,424  50  $47  31  $11  82  >i 


1,926 
1,383 


68  102 
06  53 


06  25  51  ^i 
56  13  39 
50  13  25  8  81  '4 


8,889  75 


860  00 
589  60 

27 
15 

1,644  68 

60 

1,029  87 

81 

1,111  62 

88 

174  25:  43  56 '4 

Ool  6  75 

8  87>i 

12  70.'4' 


81 


50 


77  7  91Ji 


107 
28 
833 
657 
1,527 


9  12), 

64  >^ 


18 

12 

2.5,    9  (Hi'4' 

58;        641, 

88'  13  72 


$17,234  81 ' ..I  $162  23 


$17,316  68 

j-  20,498  75 

14,625  06 

i  20,171  12 

11,400  12 
22,318  81 
26,020  88 

16,185  28 

J 


$167,586  18 


By  this  table  it  will  be  manifest  that,  upon  a 
toUil  shipment  of  $167,530.18,  there  was  a 
loss  of  revenue  to  the  Government  of  $1 62.23, 
a  confiscation  therefor  of  $17,234.81,  and  a 
liabiHty  to  confiscation  of  nearly  ten  times 
that  sum.  This  loss  of  $IG2.23  is  about  the 
amount  of  a  month's  wages  which  the  firm 
would  have  paid  to  a  head  porter  or  to  an  un- 
der clerk.  The  mistake  of  $162.23  gave  them 
an  advantage  of  less  tlian  ten  cents  on  every 
one  hundred  dollars  of  the  wliole  amount  of 
the  shipment.  Yet  it  was  gravely  argued  by 
Senator  Edm\uids,  and  passionately  declaimed 
by  Mr.  Butler,  that  this  was  conclusive  of 
fraudulent  intent  on  the   part  of  the  firm; 


that  is  to  say,  that,  for  a  gain  of  less  than  ten 
cents  on  a  hundred  dollars  (which  was  much 
more  than  offset  by  similar  mistJikes  made 
against  themselves  and  in  favor  of  the  Gov- 
ernment), a  firm  of  the  sUuiding  of  Phelps, 
Dodge  &  Company  would  wilfidly  expose 
themselves  to  public  disgrace  and  to  tlio  for- 
feiture of  $167,536.18. 

We  do  not  expect  Mr.  Butler  to  reconsider 
his  accusations,  for  he  made  tliem  as  the  agent 
of  Jayne,  and  from  personal  spite  ;  nor  do  we 
ask  Senator  Conkling  to  do  so,  for  he  was  of 
opinion  that  it  was  not  enough  to  mulct  the 
firm  in  the  sum  of  $17,234,81  for  tlie  mistake 
of  $162.23,  and  that  the  whole  amount  of 
,$167,536.18  should  have  been  sued  for.  But 
we  do  appeal  to  Senator  Kdnnmds,  good  law- 
yer and  legislator  as  he  generally  is,  to  consider 
whether  he  has  not  something  to  retract,  in 
duty  to  his  own  intelligence  and  conscience. 
Is  it  possible,  for  itisUince,  that  Senator  Ed- 
munds does  still  conscientiouHly  believe  that 
on  the  30th  of  May,  1871,  the  firm  of  Phelps, 
Dodge  &  Company  did  wilfully  intend  to  cheat 
the  Government  out  of  $1 1.82^  on  their  ship- 
ment of  $17,316.68  by  the  Nemesis?  Does 
Senator  Edmunds,  after  a  montli's  interval  for 
reflection,  feel  no  qualm  of  regret  when  ho 
remembers  that  lie,  himself,  exhibited  these 
figures  in  the  Senate,  and  argued  that  they 
showed  deliberate  fraud  upon  the  part  of  the 
firm  ?  Does  Senator  Edmunds  not  feel 
ashamed  of  the  laws  of  liis  country,  and  of 
his  own  attempt  to  resist  their  appeal,  when 
he  remembers  that,  for  this  misuike  of  $1 1.82^ 
in  an  invoice,  the  sum  of  $1,424.50  was  ex- 
torted from  the  firm,  and  half  of  it  was  divided 
up  in  spoils  10  a  man  like  Jayne,  and  in  jKjr- 
quisites  to  the  Collector.  Naval  Ofiicer,  and  Sur- 
veyor of  the  Port  of  New  York,  and  that  a 
fellow  Senator  recommended  that  steps  should 
be  taken  to  swell  the  $1,424.50  to  $17,316.68  ? 
Uas  Senator  Edmunds  nothing  to  take  back 
when  he  remembers  that  .Jayne,  after  search- 
ing with  the  scent  of  a  terrier  and  the  hunger 
of  a  panther  through  the  pa^Kjrs  representing 
importiitions  of  $50,000,000,  could  find  errors 
(like  this  of  the  shipment  by  the  Nemesis)  to 
the  amount  in  all  of  only  $1,600  in  favor  of 
the  firm  and  against  the  Government,  which 
were  counterbalanced,  as  stjited  Ijy  them, 
by  errors  fifty  times  larger,  made  by  the  firm 
in  favor  of  the  Government  and  against  them- 
selves ?" 


FURTHER  PROCEEDINGS  IN  THE  HOUSE, 


From  the  very  commenceiiKMit  of  this  investigation  in  respect  to  moieties 
and  seizures  before  the  Committee  of  Ways  and  Means,  it  was  generally 
anticipated,  as  well  as  currently  reported,  that  Gen.  Butler,  who  it  was 
admitted  had  acted  as  counsel  for  Jayne  in  his  arraignment  of  Phelps, 
Dodge  &  Co.,  and  as  such  had  directly  or  indirectly  shared  in  Jayne's 
p'under  of  the  tirm,  would  take  an  active  part  in  the  proceedings.  In  this 
anticipation,  however,  the  public  were  temporarily  disappointed.  Gen. 
Butler,  although  the  opportunity  was  offered  him,  did  not  appear  before 
the  Committee.  He  also  remained  silent  when  the  bill  repealing  the  laws 
under  wh.ch  his  client  Jayne  had  acted  was  reported  to  and  acted  upon 
by  the  House  ;  and  subsequently,  when  another  bill  repealing  the  laws 
under  which  another  client  and  protege — Sanborn — had  drawn  large 
sums  from  the  Treasury,  for  nominal  and  unnecessary  services,  he  absented 
iiimself  altogether  from  the  House,  under  the  plea  of  sickness.  How  this 
conducC  on  the  part  of  Gen.  Butler  was  regarded  by  the  press  is  illus- 
trated by  the  following  extract  from  the  Washington  corre^pondence  of  the 
New  York  Worlds  under  dale  of  June  20,  1874  : 


"  This  versatile  actor  was  originally  cast 
two  months  ago  lor  the  more  serious  dramas 
known  respectively  as  the  Moiety  Investiga- 
tion and  the  Sanborn  Swindle  ;  but  the  actor 
had  grave  misgivings  lest  he  would  cut  a 
sorry  ligure  in  these  weighty  pieces,  and 
adroitly  pleaded  sickness,  the  common  excuse 
of  the  profession,  I'rom  the  pri7na  donna  down 
to  the  jack-H-pudding.  General  Butler  fully 
succeeded  in  deluding  his  expected  audience 
for  lull  two  months.  It  was  gravely  given 
out  that  the  Kssex  statesman  was  passing 
gall  stones  through  his  body  for  a  diversion ; 
and  to  keep  up  tlie  joke  he  actually  sent  a 
doleful  and  rather  pious  letter  to  the  Chair- 
man of   the   Ways   and    Means  Committee, 


pleading  in  most  saintly  language  that  life 
and  health  are  in  the  hands  of  Providence 
alone. 

The  letter  smacked  very  much  of  a  desire  to 
be  at  peace  and  good-will  with  liis  fellow  men 
of  all  stripes  and  breeds.  But  no  sooner  was 
the  moiety  bill  passed  through  the  House,  and 
the  Sanborn  bill  disposed-  of,  when  General 
Butler  came  into  the  House  like  a  playful 
kitten.  Not  only  was  he  sprightly  in  his  wit, 
but  his  physical  bearing  never  showed  greater 
sprightliness.  Not  a  day  had  passed  since 
the  Sanborn  bill  was  disposed  of,  and  General 
Butler'showed  his  miraculous  cure  by  crack- 
ing his  terribly  sharp  wit  over  two  or  three 
members  at  a  sitting." 


The  anticipations  of  what  Gen.  Butler  would  do,  based  on  his  private 
conversation  and  threats  against  the  hrm  of  Phelps,  Dodge  &  Co.,  were  also 
.set  forth  about  the  same  time  in  the  following  humorous  editorial,  by  the 
New  York  Evening  Post: 


AN  EXTRAORDINARY  HISTORY. 


193 


A  NEW  FASHIONED  CATAPULT. 

It  is  reported  from  Washington  that  at  a 
very  early  date  there  will  be  erected  in  the 
House  of  Representatives  a  novel  battery, 
intended  to  throw  mud  to  a  great  distance 
with  immense  effect,  and  it  is  said  that  a  cele- 
brated Major  General  is  the  sole  inventor,  as 
he  will  be  the  sole  engineer  of  this  tremend- 
ous machine.  The  fortress  to  be  demolished 
and  captured  by  the  new  engine  is  the  one 
wiiich  is  garrisoned  by  the  well  known  tirm  of 
Plielps,  Dodge  &  Co, 

It  will  be  remembered  that  this  same  fort 
was  captured  by  strategy  and  treachery  a 
year  ago,  some  subordinate  officers  betraying 
the  stronghold.  At  that  time  the  citadel  had 
to  be  ransomed  for  the  amount  of  $271,000. 
Since  then  the  garrison  liavo  thrown  up 
strong  entrenchments;  and  they  now  stoutly 
maintain  that,  like  the  defenders  of  Metz, 
they  never  would  have  surrendered  except 
for  treason.  It  is  mainly  for  this  boast,  and 
for  the  reason  of  their  not  acquiescing  in  the 
consequences  of  their  former  betrayal,  that 
the  great  military  chieftain  is  determined  to 
reduce  the  stronghold  once  more,  and  this 
time  by  the  effectual  process  of  his  patent 


mud  batter}'.  He  has  laid  in  an  immense 
supply  of  mud  for  ammunition,  which  is  sup- 
posed to  have  been  ilug  out  of  the  celebrated 
Dutch  Gap  Canal.  The  guns  have  been  fur- 
nished by  the  well  known  Custom  House 
firms  in  this  city,  which  are  so  celebrated  for 
all  kinds  of  brass  castings. 

The  chieftain  confidently  believes  that  with 
his  mud  battery  he  can  not  only  damage  the 
fort  itself,  but  that  if  judiciously  discharged, 
and  not  exploded  like  a  powder  boat,  it  will 
spoil  and  l^espatter  the'dressea  and  even  the 
faces  of  the  household  of  the  garrison,  inclu- 
ding women  and  children,  and  not  even 
sparing  the  family  vaults  of  the  dead.  Some 
scientific  men  have  suggested  that  there  is 
great  danger  of  such  a  mud  battery's  burst- 
ing and  doing  more  damage  to  the  engineer- 
in-chief  than  to  the  besieged.  But  this 
engineer,  with  great  contempt,  points  to  his 
own  mud-proof  condition,  and  has  not  the 
slightest  fear  for  his  own  safety.  Great 
curiosity  is  evinced  to  witness  the  attack,  as 
there  is  much  scepticism  on  the  point  whether 
this  novel  operation  in  warfare  is  really 
becoming  a  decent  Christian  and  honorable 
legislative  body. 


During  the  very  last  week  of  the  session,  however,  the  **  Moiety ''  and 
the  "Seizure"  as  well  as  the  so-culled  "  Sanborn"  bills  having  passed  the 
Bouse,  Gen.  Butler  on  Wednesday,  June  Hth,  a.sked  of  the  House  that  the 
evening  of  Friday,  June  19th,  might  be  assigned  for  general  debate,  with 
the  understanding  tliat  he  himself  would  occupy  the  floor.  As  no  business 
was  assigned  for  that  evening,  "  the  granting  of  the  Hall  to  Butler,"  says 
the  correspondent  of  the  N.  Y.  World,  from  whom  we  again  quote  (under 
date  of  June  20th),  **  was  pretty  much  the  same  thing  as  granting  it  to  a 
company  of  negro  minstrels  or  to  a  band  of  Japs  who  advertise  to  swallow 
knives  and  spoons.  The  desire  to  hear  Butler  was  irresistible,  but  he  by 
no  means  got  the  two  thirds  assent  without  trying  twice  for  it.  Having 
failed  in  his  first  trial,  he  cajoled  the  more  fun  loving  Democrats,  and 
assured  them  that,  whatever  happened,  it  would  not  be  a  Democratic 
funeral,  but  that,  contrariwise,  they  would  be  called  on  to  participate  in  a 
very  jolly  wake  ;  and  accordingly  General  Butler  got  the  floor  for  Friday. 
Since  the  famous  Credit  Mobilier  report  there  has  not  been  such  a  full 
House  assembled  at  the  capitol." 

As  was  to  have  been  expected,  the  speech  of  General  Butler,  made  under 
the  circumstances  and  at  the  time  above  noted,  was  a  rearraigument  of 
and  an  attack  on  the  merchants  of  New  York,  and  the  firm  of  Phelps, 
Dodge  &  Co.  in  particular,  as  undoubtedly  in  his  opinion  the  best  method 

13 


194  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

of  vindicating  himself  and  the  clientage  of  spies,  informers  and  fraudulent 
revenue  contractors  whom  he  had,  for  pay,  counseled  and  protected  ;  and 
for  scurrility,  mendacity  and  buffoonery  wus  without  parallel  in  the  annals 
of  our  national  Legislature.  The  following  comprises  all  that  part  of  it 
which  especially  relates  to  the  subject  matter  of  this  service  : 

SPEECH  OF  GENERAL  BUTLER. 

Mr.  Speaker,  faifing  health  and  the  imperative  direction  of  my  medical 
adviser  of  the  danger  of  taking  part  in  a  debate  which  might  call  for  a 
draught  upon  physical  strength,  kept  me  silent  upon  the  debate  on  the 
bills  repealing  the  several  moiety  laws  by  means  of  which  the  collection  of 
taxes  had  been  assured  in  all  civilized  nations.  The  personal  enmities  and 
feelings  which  egged  on  the  prosecution  of  the  investigations  of  the  Com- 
mittee on  Ways  and  Means  have  subsided  or  failed  in  their  specific  objects  ; 
personal  ambition  and  hate,  which  were  its  impelling  motives,  have  either 
been  satiated  or  failed  in  their  purposes  ;  and  the  bill  proposed  by  the 
Committee  having  passed  the  House  without  a  division,  what  I  may  now 
bring  to  the  attention  of  the  House  will  not  have  its  weight  diminished  by 
the  allegation  of  a  desire  to  defeat  an  alleged  measure  of  reform  for  per- 
sonal or  private  reasons. 

I  assume  the  experiment  of  abolishing  moieties  is  to  be  tried.  I  only  de- 
sire, therefore,  now  to  raise  a  warning  voice  against  this  experiment  as 
one  in  the  interest  of  the  dishonest  and  unscrupulous  importer  and  tax 
evader,  against  the  interest  of  the  people  as  well  as  the  honest  and  con- 
scientious merchant. 

AVhat,  then,  is  the  moiety  system  ?  It  is  giving  certain  large  rewards  to 
officials  or  other  persons  who  will  take  upon  themselves  the  unpleasant  task 
— which  is  the  duty  of  every  citizen,  but  wholly  neglected — of  exposing 
frauds  upon  the  Government  and  evasions  of  its  taxes  by  those  by  whom 
the  law  requires  they  shall  be  paid.  This  system  has  been  the  machinery 
for  preventing  frauds  in  the  coll«^ction  of  taxes  in  all  civilized  countries 
from  time  immemorial.  We  derive  our  laws  in  this  regard,  as  indeed  in  all 
others,  directly  from  England.  It  was  declared  in  the  House,  us  an  argu- 
ment against  it,  that  the  moiety  system  had  been  abolished  in  England. 
That  is  true  ;  but  the  other  truth  which  caused  its  abolition  was  not  stated 
in  the  same  connection — and  that  is,  Great  Britain  has  abolished  duties 
upon  all  articles  of  importation  save  seven  only,  and  upon  these  her  tax  is 
substantially  a  specific  and  not  an  ad  valorem  duty,  and  she  has  thrown 
around  those  seven  articles  such  safeguards  as  to  compel  the  honest  pay- 
ment of  the  imports  upon  them,  while  we  have  imposed  duties,  generally 


AN  EXTRAORDINARY  HISTORY.  195 

ad  valorem,  on  three  thousand  (wo  hundred  and  eleven  articles  of  importa- 
tion, of  every  possible  description,  and  in  the  value  of  each  of  which  every 
custom  officer  would  be  required  to  be  skilled  and  expert  in  addition  to  his 
assured  honesty,  in  order  to  an  accurate  collection  of  the  imposed  duties  ; 
and,  in  addition,  experience  shows  that  he  would  have  to  be  still  more 
expert  as  a  detective  in  discovering  and  thwarting  the  many  devices  by 
which  the  just  dues  of  the  country  are  evaded  and  the  revenues  defrauded 
by  the  skilled,  expert,  and  unscrupulous  importer. 

It  has  been  said  and  reiterated,  "  Why  cannot  the  revenue  officers  col- 
lect all  the  revenues  ?  If  they  are  honest  and  do  their  duty,  what  neces- 
sity to  have  informers  and  detectives?"  The  answer  is  a  plain  one  :  The 
more  honest  the  officer  the  more  unsuspecting  of  fraud,  and  the  more  easily 
deceived;  and  you  cannot  get  men  for  $1,500  a  year  who  are  learned  in  the 
whole  circle  of  human  knowledge  as  applied  to  the  many  thousand  articles 
of  use,  necessity  and  luxury  which  are  imported  and  taxed  by  a  nation, 
comprising  every  variety  of  climate  and  every  grade  of  necessity  and  lux- 
ury in  its  inhabitants,  surrounded  by  a  customs  line  of  more  than  twelve 
thousand  miles,  to  say  nothing  of  Alaska,  over  which  importations  may  be 
made  without  the  payment  of  duties  unless  prevented  by  the  customs 
officers. 

Does  not  this  simple  statement  show  the  entire  impossibility  of  collect- 
ing the  just  taxes  upon  this  number  of  articles  by  the  knowledge  of  the 
customs  officers,  to  be  imported  under  an  ad  valorem  duty  founded  upon 
their  valuations,  or  to  protect  from  smuggling  so  extended  a  customs  line 
by  any  practical  number  of  officials  ?  How,  then,  can  smuggling  and  the 
much  more  extended  and  injurious  crime,  the  importation  of  goods  by 
false  values,  and  false  weight  and  measurement,  be  prevented?  Only  by 
the  imposition  of  penalties  so  severe  that  they  will  make  the  hazard  of  the 
business  more  than  commensurate  with  the  profits. 

The  smuggler  must  hide  in  nooks  and  inlets,  and  bring  in  his  goods  by 
stealth  under  the  cover  of  darkness.  Of  necessity  they  are  few  and  of  little 
cost.  The  fraudulent  importer  by  a  false  valuation  brings  in  his  goods  by 
the  cargo,  in  three  thousand  ton  steamers  plying  weekly  between  New 
York  and  Li\  erpool,  and  passes  them  through  by  a  bribed  officer  at  under 
valuation  on  a  perjured  invoice  of  a  confederate  partner  house  in  Europe, 
cheats  the  people  of  the  United  States  out  of  millions,  thereby  becomes  a 
"merchant  prince,"  and  covers  his  sins  perhaps  by  building  churches  or 
other  ostentatious  acts  of  advertising  benevolence  which  bring  trade  to  his 
house;  at  the  same  time  he  lulls  the  suspicions  and  blinds  the  vigilance  of 
the  honest  customs  officer  ;  for  how  can  he  believe  that  such  a  benevolent, 
rich  and  praying  merchant  can  be  getting  the  means  for  his  charities  by 


196         CONGRESS  AND  PHELPS,  BODGE  &  CO. 

defrauding  the  revenue,  clieating  the  people  out  of  a  mill'.on  dollars,  and 
giving  a  thousand  in  charity  that  he  may  not  be  suspected  of  the  fraud? 
I  hope  to  convince  the  House  before  I  get  through  that  this  is  no  fancy 
picture. 

General  Butler  then  entered  into  a  statement  touching  the  exportation  of 
tea  in  bond  free  of  duty,  from  Boston  to  the  British  Provinces  bordering 
on  the  coast  of  Maine,  for  the  purpose  rf  being  subsequently  reimported  to 
the  United  States  without  payment  of  duty  (the  total  quantity  so  exported 
for  all  purposes  from  Boston  in  1867  having  been  338,808  lbs.),  and  con- 
tinued: 

But  this  exporting  in  bond  of  a  few  hundred  thousand  pounds  of  tea 
to  half  civilized  islands,  as  1  have  said  before,  is  but  a  bagatelle  in  com- 
parison with  the  amount  of  frauds  committed  upon  the  revenue  by  false 
and  fraudulent  invoices  of  high  cost  merchandise.  I  have,  therefore,  been 
at  some  pains  to  get  for  the  use  of  the  House  some  accurate  data  founded 
upon  statistics,  which  may  be  verified  by  anybody  who  will  take  the 
same  pains  that  I  have  done,  and  which  cannot  be  successfully  contra- 
dicted. 

Upon  these  I  make  this  startling  announcement  to  the  House  and  the 
country:  That  the  United  States  does  not  receive  more  than  two  thirds 
of  her  revenue  upon  all  articles  on  which  ad  valorem  duties  are  imposed  in  whole 
or  in  part,  so  that  to-day  no  more  than  67  per  cent,  of  our  revenues  are 
collected,  owing  to  this  class  of  frauds  added  to  the  others  of  which  I 
have  been  speaking;  or,  in  other  words,  if  we  could  collect  our  revenues 
according  to  the  present  rate  of  taxation,  we  could  pay  off  yearly  more 
than  one  hundred  millions  of  the  national  debt,  imposing  no  greater  bur- 
dens on  the  people  than  now,  because  all  of  these  revenues  of  which  the 
country  is  defrauded  are  charged  to  the  consumer  as  if  paid  by  the  mer- 
chant; so  that  by  these  enormous  frauds  the  country  is  doubly  the  loser, 
first  in  its  revenue,  and  secondly  by  the  consumer  paying  it  to  the  fraud- 
ulent merchant^  generally  an  importer  who  has  a  branch  of  his  mercantile 
house  in  this  country  and  in  the  country  from  which  his  goods  come. 

I  would  not  dare,  sir,  to  make  this  very  startling,  nay,  wonderful  and  almost 
incredible  statement  as  to  these  frauds  of  under  valuation  and  false  invoices, 
were  I  not  fortified  by  proof  which  I  bring  to  the  attention  of  the  House, 
premising  only  that  great  as  are  the  frauds,  with  all  possible  penalties, 
seizure  of  books  and  moieties  to  informers,  and  all  the  safeguards  that  the 
experience  of  the  Custom  House  officers  of  England  and  this  country  has 
enabled  us  to  throw  around  the  revenues  of  the  United  States,  these  safe- 
guards, and  penalties,  and  hindrances  to  fraud  have,  by  the  bill  of  the  Com- 
mittee on  Ways  and  Means,  almost  every  one  of  them  been  removed. 


AN  EXTRAORDINARY  HISTORY.  197 

Now  to  the  proof.  Let  us  take  a  manufacture  which  has  but  just  begun 
in  this  country. 

Worsted  Stuffs — Fraudulent  under  valuations  in  worsted  stufifs  of  all 
kinds  sent  from  England  to  the  Uniied  States  are  simply  enormous,  as  the 
subjoined  examples  will  demonstrate  : 

Combed,  not  milled  worsted  stuffs,  exported  from  Great  Britain  in  one 
year,  total  number  of  yards,  154,206,478.  Of  these  there  were  sent  to  the 
United  States  48,542,218  yards;  to  other  countries,  105,664,260  yarde;. 
Total  value,  as  declared  in  the  invoices  to  the  United  States,  $10,324,742.24; 
to  other  countries,  $33,331,100.44  Average  invoice  value  per  yard  to  the 
United  States,  21  cents;  to  other  countries  where  there  is  no  tariff  of  dutie.«, 
39.7  cents.  Difference,  or  undervaluation,  47  per  cent.  Estimated  annual 
loss  on  duties  on  this  single  class  of  goods,  $3,007,190.40. 

Other  Worsted  Stuffs. — Total  exported  in  five  months,  85,299,174  yards; 
to  the  United  States,  28,442,728  yards;  to  other  countries,  56,856,44t> 
yards.  Total  declared  value  to  the  United  States,  $5,073,975.28;  to  other 
countries,  $18,038,050.80.  Average  per  yard  to  the  United  States,  18  cents; 
to  otlier  countries,  31 J  cents.     Difference,  or  under  valuation,  45  per  cent. 

Tiie  whole  needle  trade  of  Redditch  and  vicinity  U  carried  on  on  a 
similar  basis.  It  is  like  other  branches  of  our  foreign  trade — entirely  in  the 
hands  of  the  foreign  manufacturer  and  his  resident  agent  or  partner  here, 
thus  defying  detection  and  exposure  except  by  the  greatest  skill  stimu- 
lated by  the  highest  rewards.  Certain  it  is  that  all  articles  of  foreign 
manufacture  and  importation  shipped  to  the  United  States  are  in  quality 
and  cost  far  better  than  the  average  shipped  to  other  countries,  and,  there- 
fore, the  average  rate  of  invoicing  should  be  much  higher  for  the  United 
States,  whereas,  as  we  have  seen,  it  is  vastly  lower.  This  fact,  therefore, 
clearly  demonstrates  such  under  valuation  is  done  for  the  sole  purpose  of 
defrauding  our  revenues. 

To  show  the  accuracy  of  the  conclusion  it  is  only  necessary  to  turn  to 
articles  which  pay  purely  specific  duties.  By  their  under  valuation  nothing 
is  to  be  gained.*     Take  for  example — 

Cotton  Goods. — Total  of  heavy  printed  cotton  exported  in  the  same  year 

*  If  Gen.  Butler  had,  as  he  pretended,  Ijeen  animated,  in  making  tliis  speech,  by  a 
desire  to  do  justice  and  discuss  the  whole  subject  of  arbitrary  Custom  House  proceedings 
fairly,  he  would  not  have  omitted  to  call  the  attention  of  the  House  and  the  public  to  the  fact  that 
the  firm  of  Phelps,  Dodge  A  Co.,  as  far  back  as  the  year  1868  (three  years  before  any 
charge  of  under  valuations  were  pre'crred  against  them),  repeatedly  applied  to  the  Treasury 
Department,  and  used  all  their  influence  with  Congressional  Committees  to  have  the 
duties  on  tin  and  tin  plates  (the  articles  in  respect  to  which  under  valuations  were  sub- 
sequently alleged  to  have  occured)  changed  from  ad  valorem  to  corresponding  specific 
duties,  and  were  not  able  to  effect  it. 


198  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

ns  above  from  Great  Britain,  715,559,042  yards  ;  to  the  United  States, 
27,384,430  yards  ;  other  countries,  688,175,212  yards.  Total  declared  value 
to  the  United  States,  $3,258,229.92  ;  to  other  countries,  $72,224,682.20. 
Average  per  yard  to  the  Unitt^d  States,  11 J  cents;  to  other  countries, 
10^  cents. 

Light  Printed  Cottons. — Total  exported  same  year,  141,604,328  yards  ; 
to  tiie  United  States,  9,324,688  yards  ;  other  countries,  132,279,640  yards. 
Total  declared  value  to  the  United  States,  $1,151,591  88  ;  other  countries, 
$13,985,843.07.  Average  per  yard  to  the  United  States,  12  cents  ;  to  other 
countries,  10  cents. 

Here  it  will  be  seen  that  as  soon  as  we  approach  goods  paying  exclu- 
sively a  specific  duty  the  average  rate  of  invoicing  is  higher  to  the  United 
States  than  to  other  countries,  proving  that  a  better  class  of  goods  gener- 
ally is  sent  here  than  to  other  countries,  and  leading  to  the  inevitable  con- 
clusion that  the  same  difference  of  higher  rates  of  invoicing  would  prevail 
in  worsteds,  linens,  carpets,  &c.,  if  they  also  paid  a  specific  instead  of  an 
ad  valorem  or  mixed  duty.  The  same  facts  are  true  regarding  imports 
fr»)m  other  countries. 

Linens. — Exports  in  one  year  to  the  United  States,  70,234,347  yardfc* 
Total  declared  value,  $10,507,790.04.  Average  invoice  value,  14.9  cents  per 
yard.  Exports  same  year  to  France,  Prussia  and  Spain,  7,404,154  yards. 
Total  declared  value,  $1,046,214.72.  Average  invoice  value,  24.8  cents  per 
yard.  Difference,  or  under  valuation  in  linens  sent  to  the  United  States,  43 
per  cent. 

Linen  Damask  and  Diaper. — Exported  to  all  countries  in  one  year,  1,397,- 
077  yards;  to  the  United  States,  1,267,390  yards;  other  countries,  129,687 
yards.  Total  declared  value  to  the  United  States,  $413,311.80;  to  other 
countries,  $56,081.08.  Average  per  yard  to  the  United  States,  32  cents; 
to  other  countries,  43  cents.     Under  valuation j  26  per  cent. 

The  under  valuation  in  the  exports  of  carpets  from  the  looms  of  Kidder- 
minster, Halifax,  etc.,  is  enormous.  In  bags,  leather,  gloves,  percussion 
caps,  etc.,  the  same  ratio  of  under  valuation  is  shown  to  exist,  as  in  fact  it 
docs  with  all  articles  paying  an  ad  valorem  duty. 

Note. 

The  true  character  of  these  statements  by  Gen.  Butler,  and  that  their 
main  object  was  deception,  were  thoroughly  exposed  at  the  time  by  the 
N.  Y.  World  and  other  leading  journals.  The  following  are  illustrations  of 
such  exposures  : 


Let  us  examine  Mr.  Butler's  figures.  If 
105,664,260  yards  of  stuffs  sent  by  England 
to  other  countries  besides  the  United  States 
were  valued  at  $33,331,100.44,  it  would  be  in- 


teresting to  know  by  which  process  of  arithme- 
tic he  makes  the  average  39.7  cents  per  yard. 
For  if  anybody  will  take  the  trouble  to  multi- 
ply 105.664,260  yards  by  39.7  cents  the  re- 


AN  EXTRAORDINARY  HISTORY. 


199 


suit  of  the  operation  will  be  $41,948,711.22 
or  over  S8,60p,000  more  than  Mr.  Buller 
gives  as  the  En^rlish  return.  Instead  of  Ije- 
ing  39.7  cents  the  true  average  per  yard  is 
barely  31.64. 

Butler  goes  on  to  say  that  the  under  valua- 
tion is  47  per  cent.,  and  that  owing  to  this 
under  valuation  on  this  particiilar  article  the 
Treasury  loses  annually  $3,007,290.40. 

But  if  all  the  stuff  goods  sent  to  the  United 
States  had  V)een  invoiced  at  the  true  average 
price  of  stuff  goods  sent  elsewhere  from  Kng- 
land,  that  is.  at  31.64  cents  per  yard,  the 
total  vahio  of  these  goods  would  have  b<en 
$15.3r>S,758.07,  instead  of  $10,324,741  24,  as 
stated  by  Butler,  making  an  under  valuation 
of  $o.0.S4.016.S3.  And  as  worsteds  uff  goods 
are  subject  to  a  specific  duty  of  so  much  per 
pound,  and  in  addition  to  an  (wi  valofein  duty 


of  35  per  cent.,  the  lass  to  the  Treasury  on 
the  $5,034,016  at  35  per  cent,  is  only  $1,761,- 
905.60.  instead  of  $3,007,190.40,  as  esti- 
mated by  Butler.  It  is  hardly  necessary  to 
remind  intelligent  people  that  American  im- 
iwrtcrs  are  not  necessarily  guilt}'  of  fraud 
upon  the  revenue  becau.se  the  woollen  stuffs 
wliich  we  purchase  from  England  are  cheaper 
than  those  purchased  by  other  countries. 

For  the  fact  that  thej'  are  imix)rted  under 
a  U)wer  valuation  than  those  sent  to  other 
countries,  however,  we  have  only  Butler's 
sUitement,  and  this  may  be  accepted  as  about 
as  accurate  as  is  his  calculation  that  an  ira- 
porUition  of  10.'), 664, 260  yards  of  stufl",  cost- 
ing in  the  aggregate  $33,331,100.44,  costs 
39.7  cents  per  yard. — Keview  of  Butler^s  sjyttch. 
Neiu  York  Wmid. 


Discussing  the  same  subject  the  Boaion  Journal  also  spoke  as  follows  : 


All  will  agree  that  the  laws  for  the  collec- 
tion of  customs  should  be  simple  and  calcu- 
lated to  discourage  fraud.  But  all  good  au- 
thorities declare  that  our  laws  are  compli- 
cated, diflicult  to  interpret  or  to  apply,  and 
directly  calculated  to  invite  fraud.  Free 
Traders  and  Protectionists  unite  in  preferring 
specific  to  ad  valorem  duties,  because  speci- 
fic duties  furnish  no  chance  for  the  most 
dangerous  of  all  frauds — that  of  under  valua 
tion.  The  necessity  for  any  ad  valorem  du- 
ties is  a  misforiuno,  and  they  should  be  re- 
duced at  once  to  the  lowest  possible  number. 

But  there  is  a  class  of  duties  imposed  by 
our  customs  laws  neither  8j>ecitic  nor  ad  va- 
lorem— duties  dei)endent  upon  value,  but  in- 
creasing at  a  jimip.  when  a  certiiin  limit  of 
value  is  reached.  These  are  the  duties  that 
chiefly  tempt  imjwrters  to  fraud,  and  that 
often  make  it  impossible  for  merchants  to  cal- 
culate what  duties  they  should  pay,  or  to  fore- 
see whether  an  importation  would  be  profit- 
able or  ruinous. 

As  an  example  the  duty  on  '*  wools  of  the 
third  class  "  is  three  cents  per  pound  when 
the  value  is  twelve  cents  or  less,  and  the 
duty  mounts  to  six  cents  when  the  value 
exceeds  twelve  cents.  Thus  it  depends  upon 
the  fraction  of  a  mill  whether  the  importer 
shall  pay  three  cents  or  six  upon  his  wool ; 
and  this  may  make  all  the  difference  between 
gain  and  loss.  In  one  heavy  miportation  at 
this  port  the  value  of  Coadova  wool  was 
found  to  be  11  cents.  If  it  had  been  worth 
tliree  tenths  of  a  mill  more  the  duty  would 
have  been  increased  three  cents  per  pound, 
making  a  difference  on  this  invoice  of  twelve 
thousand  dollars  in  gold.     We  need  not  point 


out  the  great  temptation  to  under  value  sucli 
an  invoice.  This  is  not  a  solitary  case,  but 
one  of  a  hundred,  and  in  many  case^,  while 
Cordova  wool  was  imported  in  hide  packages, 
the  rate  of  duly  depended  upon  the  question 
whether  the  weight  of  the  package  should  be 
c«>nsiderod  in  estimating  the  value  by  tlie 
ix)und. 

In  the  ca.se  of  dry  g(K>ds  the  complications 
are  greater.  For  example,  on  women's  and 
children's  dress  goods  and  on  Italian  clotJis  of 
wool,  etc..  worth  twenty  cents  per  square 
yard,  the  duty  is  six  cents  per  square  yard 
and  thirty-five  per  cent,  ad  valorem ;  valued 
alK)ve  twenty  cents  eight  cents  per  square 
yard,  and  forty  per  cent,  ad  valorem,  with  a 
duty  of  fifty  cents  and  thirty-five  percent,  ad 
valorem  on  goods  weighing  four  ounces  and 
over  per  square  yard,  with  ten  per  cent  of 
duty  off  by  the  la.st  tiiriff. 

In  this  class  of  cases  the  merchant  fre- 
quently caimot  tell  what  the  duty  will  be 
when  he  orders  the  goods,  nor  when  ho  re- 
ceives them,  nor  when  he  enters  them.  Let 
us  suppose  that  he  has  ordered  an  invoice  of 
cloths,  worth  just  twenty  cents  per  yard — 
that  is,  just  as  good  as  can  te  imported  under 
the  low  rate.  A  clian/e  in  the  atmosphere, 
shrinking  the  width  of  his  cloths,  while  it 
does  not  affect  their  value  as  a  whole,  does 
affect  their  value  per  square  yard,  and  trans- 
fers them  from  the  •'  six  thirty-five  "  schedule 
to  the  *  eight  forty ''  schedule.  Again,  an 
imporier  orders  goods  weighing  a  fraction  less 
than  four  ounces — that  is,  just  as  substantial 
as  they  can  be  made  without  coming  under 
the  fifty  cent  duty — ^but  it  is  hard  to  shave 
so  close,  and  a  little  additional  wool  woven 


200 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


into  his  cloth,  without  addinp:  appreciably  to 
its  value,  changes  the  rate  from  eight  cents 
per  yard  and  jforty  per  cent,  ad  valorem  to 
tilty  cents  per  pound  and  thirty-five  per  cent. 
ad  valortm. 

Here,  again,  the  duty  may  depend  iipon  the 
state  of  the  atmosphere,  and  a  few  days  of 
moist  weather  may  ruinously  tiflect  the  amoimt 

And  subsequently  llie  New  York 
Butler's  statements,  fnrtlier  exposed 
partisan  conduct,  as  follows  : 

General  Butler,  in  his  post-prandial  speech 
in  the  House  of  Representatives,  on  the 
evening  of  June  19,  after  exhausting  his  care- 
fully collected  "facts,"  proceeded  to  make  the 
following  curt  and  unsupported  charge  against 
the  importers  of  carpets : 

"  The  under  valuation  in  the  exports  of  carpets 
from  ihe  looms  of  Kidderminster,  Halifax,  etc.,  is 
enoimous." 

This  is  equivalent  to  specifically  charging 
with  the  practice  of  under  valuation  the  great 
firms  of  A.  T.  Stewart  k  Co..  Arnold  &  Con- 
stable, Chittenden,  H.  B.  Clafin  k  Co..  and  two 
or  three  others  who  import  ninety  per  cent, 
of  all  the  foreign  made  carpets  used  in  the 
United  States.  And  even  if  Butler's  speech 
had  not  already  been  sh<  wn  to  be  as  full  of 
inaccuracies  as  post-prandial  speeches  are 
generally  apt  to  be,  most  people  would  pre- 
fer to  trust  the  honesty  of  these  firms  sooner 
than  they  would  trust  the  veracity  of  Butler 
when  the  two  were  brought  into  conflict. 
But  an  inspection  of  tlie  tariff  on  carpets,  and 
of  the  Custom  House  records  of  carpets  im- 
ported during  the  year  1873,  will  morally  re- 
fute Butler's  charge  without  further  words. 
The  duty  on  carpets  is  as  follows  : 

"On  Aubusson  and  Axminster  carpets,  .50  per 
cent,  ad  valorem  ;  on  Brussels  carpets  wrought  by 
the  Jaquard  machine.  44c.  per  square  yard,  and  35 
per  cent,  ad  valorem  ;  on  Brussels  carpets  printed 
on  the  warp,  50c.  per  square  yard;  on  Brussels  tap- 
estry, 28c.  per  square  yard  and  35  per  cent,  ad 
valorem.'''' 

Such  is  the  complicated  dut}'  on  carpets,  in- 
vented by  the  pious  Bigelow,  the  reputed  in- 
ventor of  the  Jaquard  machine.  The  average 
value  of  th'e  several  grades  of  carpets  imported, 
and  t'le  valuation  on  which  they  actually  paid 
duty  for  the  year  1873,  is  as  follows : 

"  220.012  vards  Aubusson  and  Axminster  carpets, 
avera^'e  cost  $1.90  3-5  per  yi'id;  392,700. yards  Brus- 
sels carpets,  wrought  by  the  Jaquard  machine, 
$1.48  3-5  per  yard;  789  yards  Brussels  carpets, 
printed  on  the  warp.  $1.58  per  yard;  2,598,480  y  aids 
Brussels  tapestry,  90  cents  per  yard." 

With  these  statistical  facts  before  them, 


]of  duties  to  be  paid,  Thes?e  are  not  imagin- 
ary cases,  but  are  of  frequent  occurrence  un- 
der our  larift".  They  do  not  lead  to  forfeit- 
ures, nor  expose  importers  to  penalties,  but 
jthey  may  make  profits  uncertain,  and  add 
■fearfully  to  ihe  risks  of  business.  And  we 
have  only  begun  to  state  the  perils  that  en- 
i compass  the  importer  of  dry  goods. 

World,  returning  to  the  subject  of 
his  seemingly  fair  but  really  most 


persons  tolerably  familiar  with  the  carpet 
trade  will  be  able  to  determine  whetlier  But- 
ler's allegation  of  enormous  under  valuations 
on  importations  of  carpets  has  any  foundation 
in  fact.     General  Butler  goes  on  to  say: 

"In  bags,  leather,  gloves,  percussion  caps,  etc., 
the  same  ratio  of  under  valuation  is  shown  to  exist, 
as  in  fact  it  does  with  all  articles  paying  an  ad  va- 
lorem duty." 

In  regard  to  one  of  the  articles  above 
enumerated  by  General  Butler,  viz.,  gloves, 
he  seems  to  forget  that  he  liimself  sliowed 
his  clients  Messrs.  Goodsell,  Baudillon  &  Co., 
of  Boston,  how  to  whip  the  under  valuation 
devil  around  the  Custom  House  stump.  We 
gave  eighteen  months  ago  the  history  of  these 
glove  importations,  but  we  feel  called  upon 
to  repeat  it  for  the  especial  benefit  of  Butler. 
The  house  of  Goodsell.  Baudillon  k  Co.,  in 
Boston,  has  a  resident  partner  in  Naples  who 
manufactures  the  Joseph  glove.  These  gloves 
are  protected  in  the  United  States  by  a  trade 
mark,  and  no  other  house  except  Goodsell, 
Baudillon  &  Co.,  of  Boston,  are  allowed  to 
import  them.  The  Boston  house  has  for 
years  invoiced  the  Joseph  glove  at  15  lire  for 
the  one  button  and  19  lire  for  the  two  but- 
ton gloves;  while  similar  gloves,  not  as  good, 
and  not  liaving  the  name  of  Joseph  stamped 
in  them,  could  not  be  bought  in  Naples  for 
less  than  19  to  20  lire  for  the  one  button, 
and  24  lire  for  the  two  button  gloves.  The 
Boston  house  soon  gained  the  monopoly  of 
common  gloves  in  the  American  market,  and 
kept  it  until  they  were  brought  up  by  the 
Boston  appraiser,  incited  to  the  act,  no  doubt, 
by  all  other  importers  of  gloves,  who  charged 
that  Goodsell,  Batidillon  &  Co,  grossly  under 
valued  the  Joseph  glove.  The  accused  firm 
shrewdly  employed  Butler  himself  to  defend 
them,  and  Butler  did  it  in  a  way  that  proved 
his  ciuiuing.  He  advised  his  clients  to  estab- 
lish a  market  value  for  the  Joseph  glove  in 
Naples,  by  duly  advertising  and  holding  & 
public  sale.  This  the  Naples  house  did  in 
the    following  manner:    They  advertised  a 


AN  EXTRAORDINARY  HISTORY. 


201 


large  sale  of  the  Joseph  glove  in  the  usual,  j 
regular  way — but  they  added  one  proviso, 
which  contained  the  sting  of  the  transaction. 
It  was  "  that  these  gloves  can  be  shipped  to 
and  sold  in  every  market  in  the  werld  except 
in  the  United  States  of  America  where  they 
are  protected  by  the  trade  mark."  This  was 
almost  equivalent  to  offering  a  lot  of  Ameri- 
can flags  for  sale,  with  the  proviso  that  they 
can  be  used  in  any  country  and  on  any  vessel 
except  in  the  United  States,  or  on  an  Ameri- 
can vessel.  The  consequence  was  that  the 
gloves  were  sold  in  Naples  at  the  exact  price 
at  which  the  Boston  house  invoiced  tliem, 
viz..  15  and  19  lire,  respectively.  And  the 
merchants'  appraisement  in  Boston  up  to 
1872-73  gave  it  in  favor  of  Butler's  client. 
The  World  €&r\y  in  1873  exposed  this  impu- 
dent piece  of  business,  and  called  the  atten- 


tion of  the  two  Boston  Secretaries  of  the 
Treasury  to  it.  Mr.  Kerr,  of  Indiana,  called 
for  the  papers,  and  the  consequence  was  a 
new  stoppage  of  invoices,  a  fresh  merchants' 
appraisement,  and  a  condemnation  of  Good- 
sell,  Baudillon  A' Co.  for  undervaluations.  In 
this  pickle  the  House  is  now  soaking,  nor  is  it 
likely  that  with  Mr.  Bristow  at  the  head  of  the 
Treasury  even  Butler  will  be  able  to  extricate 
them.  Thus  it  appears  that  this  virtuo\is  up- 
liolder  of  tlie  most  stringent  Custom  House 
laws  can  find  loopholes  for  under  valuers  if 
professionally  employed  by  the  right  parties,' 
and  advise  the  most  approved  method  for 
effecting  successful  under  vahiation.  Verily 
Butler's  record  proves  him  as  trustworthy 
when  he  pretends  to  watch  the  Custom  House 
as  did  the  nanny  goat  when  sci  to  watch  a 
cabbage  garden. — N.  Y.  World. 


CONTINUATION  OF  GENERAL  BUTLER*S  REMARKS. 

The  Committee  on  Ways  and  Means  may  reply  to  this — which  would  be 
the  fact — that  they  have  not  had  tliese  statistics  before  them.  Certainly 
not.  If  they  have,  their  report  does  not  show  it.  They  have  examined 
only  cases  of  individual  merchants  to  find  out  if  the  laws  have  worked  sup- 
posed hardships,  and  not  the  case  of  the  people,  to  see  how  they  are 
defrauded.  The  Committee  put  forward  most  prominently  of  all,  as  exam- 
ple of  the  hardship  of  the  law  upon  honest  men,  the  case  of  Phelps,  Dodge 
&  Co.,  making  the  case  of  that  firm  the  groundwork  for  all  their  recommended 
legislation  ;  and  in  their  report,  and  in  the  debate  which  followed,  and 
which  for  days  members  of  the  Committee  had  substantially  to  themselves, 
no  one  has  uttered  a  word  of  animadversion  upon  Phelps,  Dodge  &  Co. 
No  harsh  language  is  used — all  that  is  reserved  for  the  officer  who  brought 
their  pleaded  guilt  to  light.  In  the  course  of  the  evidence,  as  taken  before  the 
Committee,  there  seems  to  be  a  studied  and  careful  attempt  that  that  firm  shall 
appear  to  the  country  as  honest  and  injured  merchants,  who  had,  by  the  de- 
vices of  the  officers  of  the  Government,  been  robbed  of  a  very  large  sum  of 
money.  All  the  lawyers  and  chairmen  ofboardsoftrade,  and  there  were  many, 
made  it  the  groundwork  of  their  attacks  upon  the  revenue  laws.  It  went 
forth  as  the  cheval  de  hataille  of  those  who  desired  to  take  off  all  effective 
penalties  to  prevent  frauds  in  the  collection  of  the  revenue. 

The  facts  of  this  case,  as  stated  by  Mr.  Dodge,  the  senior  partner,  whose 
testimony  as  a  witness  occupied  longer  time  than  any  other  witness  save 
one,  and  to  make  room  for  whom  the  representatives  of  the  National  Board 
of  Trade  gave  way,  are  these:  (Let  us  premise  by  saying,  however,  that 
none  of  the  active  junior  partners  of  the  house  who  swore  to  the  invoices, 
and  were  charged  with  committing  the  frauds,  were  sent  for  by  the  Com- 


202  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

mittee.)  Phelps,  Dodge  &  Co,,  a  firm  of  many  years'  standing,  who  had 
imported  between  "  three  and  four  hundred  million  dollars'  worth  of  goods, 
and  had  paid  the  United  States  Government  more  than  fifty  millions  of 
duties"  very  honest — giving  the  very  language  of  Mr.  Dodge^— "  I  will  say 
it  with  perfect  confidence,  that  our  good  name  and  our  integrity  were  never 
assailed  in  these  many  years  ui  til  it  was  assailed  by  the  Government 
— meaning  the  charge,  made  by  a  special  agent  of  the  Treasury,  of  false 
valuation  in  December,  1872.  Mr.  Dodge  again  reiterates  that  statement  : 
*'The  first  knowledge  or  hint,  in  forty  odd  years  of  business  that  I  have  had 
with  the  Government,  that  I  was  accused  of  any  dereliction  of  duty,  was 
when  sitting  at  the  board  of  one  of  our  large  institutions  I  received  a  note 
from  my  partner,  asking  me  to  come  to  the  Custom  House  (in  December, 
1872);  that  thereupon  he  went,  and  found  his  firm  accused  of  having  many 
invoices  for  five  years — which  was  as  far  as  the  Government  could  go  back 
on  account  of  the  statute  of  limitations — sworn  to  at  a  false  valuation,  for 
the  purpose  of  defrauding  the  revenue;  and  that  the  books  and  papers  of 
the  firm  touching  those  importations  would  be  seized  if  not  voluntarily  pro- 
duced to  the  officers.  Thereupon,  yielding  to  the  necessity,  his  books  and 
papers  were  produced,  and  from  those  books  and  papers  the  special  agent 
of  the  Treasury  made  up  an  account,  first  of  $260,000,  but  afterwards  com- 
ing up  to  the  enormous  sum  of  $271,000,  the  amount  of  articles  in  the 
invoices  in  which  "simple  mistakes"  only,  as  Mr.  Dodge  now  declares,  had 
been  made  in  stating  their  value,  by  which  the  Government  had  lost  duties 
to  the  amount  of  some  sixteen  hundred  dollars  only.  But  Phelps,  Dodge 
&  Co.,  fearing  that  these  "simple  mistakes"  would  hold  them  guilty  in  a 
court,  and  being  "  subject  to  a  system  of  terrorism  "  which  they  could  not 
withstand,  in  order  to  save  themselves  from  the  oppressions  of  the  Govern- 
ment officials,  in  entire  consciousness  of  integrity  and  innocence  of  all 
intended  or  actual  wrong,  after  they  had  taken  counsel  of  four  most  eminent 
lawyers,  and  after  reflecting  upon  the  subject  for  more  than  six  weeks, 
made  an  offer  of  compromise  of  penalties  for  the  crime  of  importation  by  false 
invoices,  which  they  confessed  in  writing  they  had  done,  and  paid  this  very 
great  sum  of  money  into  the  Treasury  as  penalty. 

This  is  the  statement,  in  brief,  as  Mr.  Dodge  puts  it  forward  in  connection 
with  the  record.  He  admits  that  the  house  of  Phelps,  Dodge  &  Co.  has  had, 
for  many  years,  a  branch  house  in  Liverpool — Phelps,  James  &  Co. — which 
was  substantially  the  same  in  interestas  the  house  in  New  York — composed 
of  the  same  Phelps  and  the  same  James  as  the  house  in  New  York.  To  ex- 
clude all  conclusion  that  this  Mr.  James  of  this  firm  in  Liverpool  did  any 
wrong,  Mr.  Dodge  tells  us  that  Mr.  James  joined  the  firm  and  removed  to 
Liverpool — 


AN  EXTRAORDINARY  HISTORY.  203 

"  Where,  for  over  forty  years,  he  has  ))een  the  resident  partner,  sustaining  the  character  of 
a  high-minded,  respected  and  honorable  merchant,  and  for  a  number  of  years  past  the  oldest 
American  merchant  in  England :  his  name  is  a  synonym  of  honesty  and  uprightness,  and 
shedding  a  lustre  on  his  own  country  and  American  merchants  ;  gratified  by  the  honors  con- 
ferred abroad,  but  ever  looking  with  pride,  as  an  American  citizen,  for  protection  to  his  own 
country.  In  all  this  time  not  a  question  had  ever  arisen  as  to  the  vast  shipments  made  to 
the  house  in  New  York.  On  entering  his  office  one  day  in  December,  1872,  he  found  the  fol- 
lowing despatch,  in  leaded  lines,  in  the  newspapers : 

'Phelps,  Dodge  &  Co.,  New  York. — This  great  firm  have  had  their  books  and  papers 
seized  by  the  United  States  for  alleged  frauds  on  the  revenue  to  the  amount  of  $1,150,000." 

I  will  not  attempt  to  describe  the  feelings  of  such  a  man.  I  will  simply  say  the  shock 
came  well  nigh  killing  him  ;  nor  has  he  ever  entirely  recovered.  He  felt  that  a  life-long  repu- 
tation, dearer  to  him  than  aught  else,  had  been  struck  down  in  a  moment  by  his  own  Gov- 
ernment, on  which  he  had  depended  for  protection.  Ho  had  passed  his  throe-score  and  ten 
until  then  with  an  unblemished  character,  and  felt  that,  at  least,  he  had  a  right  to  demand 
that  tlie  should  l»e  '  considered  innocent  till  proved  guilty.'  Can  a  law  liable  to  produce  such 
results  be  just?" 

If  this  account  of  Mr  Dodge  is  in  tlie  main  true;  nay,  if  it  is  found  lo 
be  true  in  any  substantial  portion;  if  bis  firm  liad  maintained  always  a 
name  for  integrity  and  honesty  of  dealing  with  the  (Jovernment;  if  his 
statement  about  Mr.  James  be  true,  that  "  in  all  this  time  not  a  question 
had  ever  arisen  as  to  the  vast  shipments  made  to  the  house  in  New  York," 
then  I  agree  "that  a  law  liable  to  produce  such  results  not  only  is  unjust " 
and  should  be  repealed,  but  that  it  is  the  duty  of  the  United  States  Gov- 
ernment to  condignly  punish  the  oflBcers  who  have  done  so  gross  a  wrong 
to  such  honorable  men,  and  not  only  to  repay  them  the  money  that  has 
been  extorted  from  them,  but  to  give  them  a  very  large  sum  assomeslight 
reparation  for  the  unqualified  wrong  and  unheard-of  injur)'  without  just 
cause  committed  upon  them.  But  if  all  these  are  not  true,  in  substance  or 
in  fact;  if  the  whole  story  in  all  its  essential  parts  is  as  false  as  the  per- 
jured invoices  under  which  Phelps,  Dodge  &  Co.  pleaded  guilty  that  they 
passed  their  goods  without  tax  into  the  country,  then  the  law  that  catches 
perjured  scoundrels  and  smuggling  villains  and  punishes  them,  however 
severely,  ought  to  be  sustained  and  made  more  stringent,  not  less. 

The  first  statement  of  Mr.  Dodge  which  challenges  attention  is  whether 
the  house  in  New  York  and  Liverpool  has,  untif  the  latter  part  of  Decem- 
ber, 1872,  always  borne  this  unblemished  reputation  without  fault  or  blot, 
which  he  states;  and  have  the  dealings  of  that  house  with  the  Government 
been  always  just  and  true,  as  Christian  "  merchant  princes  ''  ought  to  have 
dealt  with  the  Government  ?  Because,  if  that  be  so,  it  can  hardly  be  be- 
lieved that  for  a  comparatively  small  sum  of  money  a  house  of  such  wealth 
and  good  repute  has  suddenly  become  so  vile  and  so  criminal  as  they  con- 
fessed themselves  to  be  in  their  letter  to  the  Secretary  of  the  Treasury 


204  CONGRESS  AND  PHELPS,  DODGE  &  00. 

when  they  desired  to  "settle"  with  the  Government  for  their  crimes.  If, 
on  the  other  hand,  it  is  found  that  this  firm  have  been  cheating  this  Gov- 
ernment for  long  years,  then  we  shall  conclude  that  they  have  only  been 
caught  at  their  old  tricks. 

Now,  Mr.  Speaker,  it  is  a  notorious  fact  to  everybody  having  to  do  with 
importations  in  New  York  officially  for  many  years  past,  that  the  house  of 
Phelps,  Dodge  &  Co.  have  been  confessed  to  be  guilty  of  the  most  petty 
and  outrageous  smuggling,  taking  advantage  of  all  technical  points  to  get 
their  goods  in  without  paying  duties  that  could  be  most  ingeniously  con 
ceived. 

A  harsh  accusation  this,  you  say.  Yes,  and  one  that  ought  not  to  be 
made  unless  it  can  be  made  good.  Well,  then,  sir,  many  years  ago,  since 
the  forty  years  that  Mr.  James  has  been  resident  partner  of  the  house  in 
Liverpool  and  interested  in  the  house  in  New  York,  during  which  Dodge 
says  not  a  question  has  been  raised  as  to  the  vast  shipments  of  this  house, 
and  since  Phelps,  Dodge  &  Co.  have  been  one  of  the  largest  importers  in 
the  country  of  lead,  tin  and  otiier  metals,  the  Congress  of  the  United 
States  passed  a  law  to  encourage  American  art,  a  law  which  in  various 
phases  you  will  find  on  your  statute  books  as  the  tariff  was  revised  from 
time  to  time,  which  was  in  effect  that  statuary  of  American  artists  should 
come  in  free.  Whereupon  this  firm,  of  which  Mr.  James,  this  "honest, 
honored  merchant,"  was  resident  partner  and  consignor,  had  hundreds  and 
thousands  of  tons  of  lead  and  block  tin  and  copper  cast  into  statuettes  of 
the  Goddess  of  Liberty,  and  Washington,  and  Jefferson,  and  imported  them 
into  this  country  as  works  of  American  art,  thereby  escaping  the  duty. 
But  when  here  they  were  taken  from  the  hold  of  the  vessel  to  the  ware- 
house, and  from  the  warehouse  went  to  the  melting  pot,  being  sold  to  their 
customers  for  pig  lead  and  tin.* 

Now,  right  here,  I  challenge  any  honest,  just  minded  man  to  look  me  in 
the  face  and  say  that  an  "  honest  merchant  "  or  a  "Christian  gentleman" 
ever  did  such  a  thing  to  cheat  his  Government,  whether  a  James  of  Liver- 
pool'or  a  Dodge  of  New  York.  And  yet  this  Dodge  tells  us  that  the  "  first 
knowledge  or  hint,  in  forty  odd  years  of  business  that  I  have  had  with  the 
Government,  that  I  was  accused  of  any  dereliction  of  duty  "  was  in  Decem- 
ber, 1872.  Was  that  true?  So  far  from  its  being  true,  Mr.  Speaker,  Con- 
gress had  to  change  this  very  law  about  American  statuary  on  account  of 
these  fraudulent  importations  and  cheating  of  the  revenue  of  which  I  have 
spoken  by  this  very  firm;  and  this  firm  was  accused  of  this  fraud  upon  the 
revenue  on  the  1st  day  of  March,  1865,  on   this  very  floor.     I  send  to  the 

♦For  demonstration  of  the  malignity  and  entire  falsity  of  this  and  subsequent  charges  preferred 
ih  this  speech  of  Gen.  Butler,  against  the  firm  of  Phelps,  Dodge  &  Co.,  attention  is  here  asked  to  the 
card  of  the  Arm  and  other  full  and  comprenensive  statements  presented  hereafter  in  these  pagee. 


AN  EXTRAORDINARY  HISTORY.  205 

Clerk  to  be  read  an  extract  from  the  Congressional  Globe  of  that  date,  part 
two,  second  session  Thirty-eighth  Congress,  page  1255.  The  fifth  section 
of  the  tariif  bill  was  under  discussion,  and  was  as  follows: 

And  he  it  further  enacted,  That  the  term  statuary,  as  used  in  the  laws  now  in  force  impos- 
ing duties  on  foreign  importations,  sliall  be  understood  to  include  professional  productions  of 
a  statuary  or  a  sculptor  only. 

Mr.  Keunan. — I  desire  some  explanation  of  this  section.  I  should  like  to  know  what  this 
unprofessional  statuary  is.  Has  this  provision  reference  to  those  people  who  import  leaden 
statues  of  Liljerty,  etc.? 

Mr.  Morrill. — I  may  state,  in  brief,  that  it  has  been  found  that  parties  have  in  many  cases 
evaded  the  payment  of  duties  by  importing  articles  in  form  of  statuary  when  the3'  could  not 
legitimately  rank  as  such.  In  some  instances  leiid  has  been  thus  imported  to  a  large  extent. 
We  had  a  law  by  which  statuary  was  admitted  free;  and  statues  of  the  "  Father  of  his 
Country  "  and  of  the  "Author  of  the  Declaration  of  Independence  "  were  brought  over  in 
that  way.     I  believe  that  the  gentleman  is  answered. 

Mr.  Eldredoe. — I  would  like  to  know  from  the  gentleman  from  Vermont  whether  ihis 
does  not  refer  to  one  particular  tirm.  I  want  to  know  whether  this  docs  not  refer  to  Phelps, 
Dodge  &  Co.,  and  that  firm  alone? 

Mr.  Stevens. — When  statuary  was  admitted  free  we  had  statues  of  Webster  and  Clay  and 
others  in  copper  and  lead  imported,  and  as  soon  as  tliey  were  landed  and  taken  out  of  the 
Custom  House  they  were  melted  down.     It  was  a  fraud  upon  the  revenue. 

Mr.  Eldredge. — What  firm  did  that? 

Mr.  Stevens. — Phelps,  Dodge  &  Co. 

Now,  as  Mr.  Dodge  himself  came  into  Congress  aa  a  member  of  this 
House  at  the  very  next  session,  one  would  have  supposed  that  he  would 
have  arisen  to  explain  if  this  very  grave  charge  upon  the  President  of  the 
Young  Men's  Christian  Association  was  not  true.  So  far  the  record.  I 
am  told,  and  I  believe  that  there  are  men  in  this  House  who  know  the 
fact  that  Mr.  Dodge  himself  admitted  before  the  Committee  on  Ways  and 
Means  of  a  former  House,  when  questioned,  that  these  importations  were 
made  ;  the  fact  has  never  been  denied,  and  can  be  easily  substantiated. 
Imagine  the  fine  feelings  of  this  old  Mr.  James,  the  "honored  mer- 
chant" of  Liverpool,  when  he  was  loading  up  this  fraudulent  statuary  to 
cheat  the  revenue  of  his  country! 

I  have  no  doubt  that  it  was  quite  true,  as  Dodge  states,  that  when  James 
heard  that  Phelps,  Dodge  &  Co.'s  books  had  been  seized  in  New  York  in 
1873,  he  nearly  fell  dead,  or  it  almost  killed  him,  for  he  knew  how  fraudu- 
lent their  acts  were  and  always  had  been,  and  feared  the  consequences. 
There  was  a  merchant  of  high  standing  in  Boston  not  many  years  ago  who. 
when  charged  with  frauds  upon  the  revenue,  made  confession  by  commit- 
ting suicide. 

Importing  of  lead,  and  tin,  and  copper  in  the  form  of  statuary  was  by  no 
means  the  most  serious  attack  of  this  firm  upon  the  revenues  of  the  Gov- 
ernment for  their  own  benefit.     Cast  your  mind  back,  Mr.  Speaker,  to  April, 


206  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

1864,  the  very  darkest  hours  of  the  war,  when  Grant  was  reorganizing  the 
Army  of  the  Potomac  for  his  march  on  Richmond;  when  every  patriotic 
man  was  preparing  himself  for  the  final  great  struggle;  when  the  nation 
needed  every  dollar  that  it  could  command,  and  when  it  became  necessary 
to  add  one  half  to  our  revenues  by  taxation  to  sustain  our  falling  credit, 
with  gold  at  180.  What  shall  we  say  of  a  firm  which,  in  that  trying  hour 
of  the  nation's  peril,  exercised  its  infernal  ingenuity  in  devising  ways  and 
means  to  defraud  our  impoverished  Treasury  of  millions,  and  succeeded  in 
so  doing  ? 

To  meet  the  exigency  we  are  obliged  to  pass  a  joint  resolution  providing 
that  until  the  end  of  sixty  days  50  per  cent,  of  the  rates  of  duties  imposed 
by  law  should  be  added  to  the  then  present  duties  and  imposts  on  all 
goods,  wares  and  merchandise,  so  that  we  might  have  that  time  in  which 
to  adjust  the  tariffs;  and  then,  just  sixty  days  from  that  time,  to  wit,  on 
the  30th  of  June,  we  passed  an  "An  act  to  increase  the  duties  on  imports." 
It  covered  nearly  all  importations,  and,  among  other  things,  it  provided — 

On  tin  plates,  and  iron  galvanized  or  coated  with  any  metal  by  electric  batteries  or  other- 
wise, 2^  oents  a  pound. 

At  this  time,  if  ever,  Mr.  Speaker,  it  became  all  patriotic  men,  all  lovers 
of  the  country,  to  do  everything  that  possibly  could  be  done  to  aid  the  rev- 
enues of  the  country,  to  sustain  its  credit  and  enable  the  soldiers  to  receive 
their  pay,  and  to  support  the  armies  in  the  field.  Let  us  see,  then,  what 
the  course  of  this  firm  of  Christian  merchants,  Phelps,  Dodge  &  Co.,  was  in 
that  crisis  of  their  country's  need.  They  were  the  largest  importers  of  tin 
plates  in  the  country,  and  that  article  is  one  of  the  largest  of  their  import- 
ations. As  we  shall  see  in  a  moment,  it  ought  to  yield  a  large  revenue. 
The  duty  upon  it  at  that  time  was  25  per  cent,  ad  valorem,  which  would  be 
about  1 J  cents  per  pound.  It  was  the  intention  of  Congress  to  increase  it; 
therefore  they  enacted  that  "on  tin  plates,  and  iron  galvanized  or  coated," 
etc.,  there  should  be  a  duty  of  2|  cents  a  pound.  But  Mr.  William  E. 
Dodge  went  to  the  Treasury  Department  of  the  United  States  in  his  own 
person,  as  I  have  the  means  of  showing,  and  there  advocated  a  reading  of 
that  law  which  was  sanctioned  neither  by  the  letter,  text,  spirit  nor  mean- 
ing, nor  by  the  true  and  just  thought  of  any  patriot.  He  procured  an 
opinion  from  the  Treasury  Department  by  which  the  comma  was  construed 
to  be  removed  after  the  word  "plates  "  and  inserted  after  the  word  "iron," 
so  as  to  make  it  read: 

On  tin  plates  and  iron,  galvanized  or  coated  with  any  metal  by  electric  batteries  or  other- 
wise, 2^  cents  a  pound. 

So  that,  with  that  construction,  the  duty  had  not  been  raised  on  tin 


AN  EXTRAORDINARY  HISTORY.  207 

plates  at  all,  but  only  on  "  galvanized  "  tin  plates.  Who  ever  beard  of 
a  galvanized  tin  plate  ?  None  was  ever  imported,  I  venture  to  say,  or 
ever  will  be.  The  consequence  was,  that  all  the  tin  plates  imported  into 
the  United  States,  of  which  Phelps,  Dodge  &  Co.  were  by  far  the  largest 
importers,  came  in  at  25  per  cent,  ad  valorem  instead  of  2J  cents  a  pound, 
which  was  a  very  large  increase  of  duty.  I  send  a  table  to  the  Clerk  to 
show  how  this  would  operate  in  favor  of  Phelps,  Dodge  &  Co.  I  have 
not  been  able  to  obtain  the  statistics  of  their  importations  in  1864-65,  but 
I  have  their  importations  for  1870-71,  in  which,  taking  the  average  both 
of  weight  and  value,  the  following  result  is  shown. 

The  Clerk  read  as  follows: 

Imports  of  Tin  Plates  by  Phelps,  Bodge  &  Co.  for  the  year  1870-71. 

1870,  (boxes) • $585,  378 

1871,  (boxes) 734.  112 

Total,  (boxes) 1,  319,  490 

Average  weight,  (pounds),  say 125 

Total  weight,  (pounds) 164,  936,  250 

Duty,  (cents) 2i 

Total  duty $4,123,406  25 

Total  number  of  boxes,  1,319,490,  at  an  average  value  of  22  shillings  sterling  per  box, 
making  £1,551,439 ;  equal  in  United  States  gold  to  $7,024,965 ;  duty  at  25  per  cent,  $1,756,241 . 

RECAPITULATION. 

Amount  of  duty  at  specific  rate  of  2^-  cents  per  pound $4,123,406 

Amount  of  duty  at  ad  valorem  rate  of  25  per  cent 1,766,241 

Difference  in  favor  of  importer $2,367,165 

Mr.  Butler,  of  Massachusetts. — Showing,  it  seems  to  me  clearly,  even 
admitting  that  my  average  may  be  considerably  out  of  the  way,  a  diflference 
of  at  least  100  per  cent,  in  favor  of  the  ad  valorem  rate. 

Whether  that  average  value  is  precisely  correct  or  not  is  of  no  conse- 
quence, because  it  would  not  substantially  vary  the  figures,  and  that  shows 
that  in  1870-'71,  and  every  other  year  from  1864  until  the  change  of  the 
tariff  on  June  6,  1872,  would  make  a  difference  in  favor  of  Phelps,  Dodge  & 
Co.  and  against  the  United  States,  by  this  change  of  the  law  at  the  personal 
solicitation  of  William  E.  Dodge  with  the  Treasury  oflBcers  of  the  United 
States,  of  $2,367,000,  and  over  four  millions  annually,  taking  the  whole 
importation  of  the  United  States  during  that  eight  years. 

We  have  heard,  in  the  matter  of  the  duty  on  fruits,  the  earnest  denunci- 
ation of  the  Committee  on  Ways  and  Means  of  the  Treasury  Department 


208  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

for  not  paying  attention  to  the  position  of  a  comma,  by  which  $300,000 
were  refunded;  but  the  Committee  on  Ways  and  Means  have  told  the 
House  nothing  of  the  effect  in  favor  of  Phelps,  Dodge  &  Co.,  not  solely  of 
looking  out  for  a  comma,  but  the  deliberate  taking  of  a  comma  from  one 
part  of  a  law,  where  it  had  been  placed  by  Congress,  and  putting  it  in 
another  place  where  there  was  none,  by  which  quite  four  millions  of  reve- 
nue were  lost  to  the  Government  annually  during  a  period  of  eight  years, 
and  that  in  favor  of  the  fraudulent  importer.  In  verification  of  this,  I  send 
to  the  clerk  a  letter  of  the  Secretary  of  the  Treasury  of  July  22,  1864,  and 
I  beg  him  to  read  the  portion  between  the  brackets. 
The  Clerk  read  as  follows: 

Sir:  Your  letter  of  the  12th  instant  is  received,  requesting  to  be  instructed  in  writing  in 
relation  to  the  proper  construction  of  the  language  of  the  second  paragraph  on  the  ninth  page 
of  the  printed  tariff  of  June  30,  1864,  viz:  "On  tin  plates,  and  iron  galvanized  or  coated 
with  any  metal  by  electric  batteries,  or  otherwise,  2^^  cents  per  pouud.'' 

It  would  appear  that  an  error  of  punctuation  has  been  made  by  some  one  ;  most  probably 
by  the  clerk  who  engrossed  that  part  of  the  act.  If  the  comma  which  is  inserted  after  the 
word  "  plates  "  be  omitted,  and  a  comma  placed  after  the  word  "  iron,"  the  true  sense  will  be 
had,  which  unquestionably  is  that  the  tin  plates,  as  well  as  the  iron,  must  be  galvanized  or 
coated  with  any  metal  by  electric  batteries,  or  otherwise,  in  order  to  bring  tliem  within  the 
provision. 

Mr.  Butler,  of  Massachusetts.— And  that  construction  remains  even 
unto  this  day;  for  we  find  in  the  authorized  tariff  of  the  Treasury  Depart- 
ment, published  after  the  act  of  June  6,  1872,  which  took  off  10  per  cent, 
from  the  duties,  the  following  remarkable  announcement: 

Tin  plates,  galvanized  or  coated  with  any  metal  otherwise  than  by  electric  batteries,  2^ 
cents  per  pound.     Ordinary  tin  plates,  or  tins  other  than  the  above,  15  per  cent,  ad  valor^em. 

And  yet,  with  this  vast  fraud  upon  the  revenue  by  this  firm  staring  them 
in  the  face,  if  they  had  chosen  to  examine  it,  the  Committee  on  Ways  and 
Means  have  recommended  the  diminution  of  duty  on  tin  plates,  upon  the 
petition  of  Phelps,  Dodge  &  Co.,  to  one  cent  per  pound,  and  passed  the  bill 
through  under  suspension  of  the  rules. 

Mr.  Dawes. — No,  sir;  one  cent  and  a  quarter,  against  their  protest. 

Mr.  Butler,  of  Massachusetts. — -Ah!  One  cent  and  a  quarter.  Which 
was  against  their  protest,  the  one  cent  or  the  quarter  cent? 

Mr.  Dawes.— I  gave  you  fair  answer,  sir. 

Mr.  Butler,  of  Massachusetts. — Certainly,  sir.  I  suppose  you  would  not 
give  any  other.     What  made  you  think  you  would  ? 

Mr.  Dawes. — You  did  not  treat  it  fairly.  Ordinarily  such  an  answer 
would  be  fairly  treated. 

Mr.  Butler,  of  Massachusetts.  Wait  a  moment.  1  will  read  the  memo- 
rial sent  to  Congress  on  this  subject: 


AN  EXTRAORDINARY  HISTORY.  209 

To  the  honorable  Firiarice  Committee  of  the  Senate  and  House  of  Representatives  of  the  United 

States. 

Your  memorialists — merchants,  importers,  dealers  and  workers  of  tin  plates — respectfully 
request  that  you  will  consider  the  expediency  and  recommend  to  Congress  the  conversion  of 
its  present  ad  valorem  duty  on  the  import  of  tin  plates  into  a  corresponding  and  equivalent 
specific  duty,  as  a  measure  calculated  to  simplify  and  increase  the  collection  of  customs 
revenue. 

****  *  *  *  ** 

The  importations  of  tin  plates  during  the  last  two  fiscal  years  were  in  value  as  follows : 

1872.— Amount  in  value  imported $12,312,428 

1873. — Amount  in  value  imported '. 14,993,650 

Total  value $27,300,078 

That  with  an  ad  valorem  duty  of  16  per  cent,  the  accruing  revenue  would  have  amounted 
on  this  importation  to  $4,095,761.70. 
But  the  actual  weight  imported  durmg  the  above  two  years  was  : 

Pounds. 

1872.— Gross  weight,  including  boxes 209,071,640 

1873.— Gross  weight,  including  boxes 214,009,374 

Total  pounds 423,741,014 

which  import,  at  a  specific  duty  of  one  cent  per  pound,  gross  weight  (or  including  the  weight 
of  the  packages),  would  have  yielded  a  revenue  of  $4,237,410.14.  The  difference  in  two 
years'  revenue  receipts,  therefore,  between  the  present  ad  valorem  and  the  recommended 
specific  rate  of  duty,  would  have  been  only  $141,648.44,  or  about  $70,000  per  annum,  and 
that  $70,000  in  favor  of  the  revenue. 

Who  do  you  suppose  signed  this  memorial?  The  first  signature  is  that 
of  Phelps,  Dodge  &  Co.,  of  New  York. 

Mr.  Dawes — But  you  said  that  we  passed  through  here  a  bill  making  the 
duty  one  cent  a  pound,  on  their  petition.  Now  look  at  the  bill,  and  it  will 
show  that  the  duty,  as  fixed  by  this  House,  was  one  cent  and  a  quarter  per 
pound,  which  is  an  increase  over  the  present  tariff;  and  that  la  their  com- 
plaint, which  they  have  carried  to  the  other  end  of  the  Capitol. 

Mr.  Butler,  of  Massachusetts. — And  have  got  it  down  there,  I  believe, 
to  one  and  one  tenth  of  a  cent. 

Mr.  Dawes. — No  matter  what  they  have  got  it  down  to  there.  Your 
charge  was  against  the  present  Committee  on   Ways  and  Means. 

Mr.  Butler,  of  Massachusetts. — They  came  here  and  asked  for  a  duty  of 
one  cent  per  pound;  and  you  put  it  upon  tin  plates,  wooden  boxes,  iron 
packages,  and  all  at  one  and  a  quarter.     Is  not  that  so  ? 

Mr.  Dawes. — And  does  not  that  make  more  for  them  to  pay? 

Mr.  Butler,  of  Massachusetts. — Does  it  ? 

Mr.  Dawes. — Does  it  not  make  more  to  put  the  duty  on  the  boxes  as  welj 
as  the  tin  ? 

14 


210  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Bptler,  of  Massacliusetts. — No,  sir.  There  is  a  specific  duty  now  on 
the  packages,  whicli  is  not  to  be  collected  "when  you  put  on  the  duty  by 
the  pound.  But,  liowever  that  may  be,  one  cent  and  a  quarter  per  pound 
is  not  two  c«  nts  and  a  half. 

Mr.  Dawes. — Your  charge  was  against  the  Committee  on  Ways  and 
Means.     Will  you  please  stick  to  that? 

Mr.  Butler,  of  Massachusetts. — No,  sir;  I  have  got  through  with  them 
for  the  present. 

Mr.  Dawes. — Because  you  are  answered. 

Mr.  Butler,  of  Massachusetts. — The  facts  before  us  are  all  before  the 
country. 

Mr.  Dawes  — You  ought  to  leave  your  statements  as  they  are  then. 

Mr.  Butler,  of  Massachusetts. — Now,  having  disposed  of  that  difference 
of  a  quarter  of  a  cent  a  pound  between  me  and  the  learned  Chairman  of 
the  Committee  on  Ways  and  Means  (Mr.  Dawes),  I  find  I  must  hasten  on. 


STATEMENTS  OF  GENERAL  BUTLER  REFUTED. 

The  utter  and  entire  falsity  of  the  above  statements  of  Gen.  Butler  was, 
almost  immediately  after  the  publication  of  his  speech,  taken  up  and  ex- 
posed by  the  N.  Y.  World  in  the  following  article,  entitled 

BUTLER'S    ATTACK    ON    SECRETARY  I  and  light.     Says  Mr.  Wells,  in  our  issue  of 
FESSENDEN.  j  May  11: 

i      "The  firm  of  Phelps,  Dodge  &  Co.  was  not  at 

The  Congressional  Record  has  reached  us  the  time  of  the  occurrence  of  these  events  in  ex- 
containing  a  v^Mtim  report  of  General  Bnt- !  'nrefy 'thS?  of 'phel^s  *  V^Wtfo'S'l'arge  ISl 
ler  s  speech,  although  most  ot  the  m embers  porters  of  metals,  were  not  concerned  in  this  matter 
upon  whom  his  lash  fell,   Roberts,   Tremain  I  of  the  leaden  images." 

and  Foster,  withold  their  remarks  for  revision,  j  The  General  might  hvae  been  just  as  amus- 
doubtless  in  order  to  season  them  with  esprit  \  ing  over  the  stripped  roofs  of  Old  England, 
d'escalier,  a  sauce  which  Butler  never  serves  l  the  musket  bullets,  the  leaden  weights,  the 
himself  up  in.  deep    sea   sounding    leads,    and    the     clock 

There  are  several  blunders  in  the  speech  weights,  as  he  was  over  the  bunged  eye  of 
which  disgrace  General  Butler  and  discredit  the  leaden  goddess  of  liberty  and  the  broken 
the  House  of  Representatives,  which  among  nose  of  General  George  Washington  in  Mr. 
its  300  members  supplied  not  one  political  Duncan's  back  yard,  but  he  was  "cursed  with 
economist  capable  of  correcting  him  on  the  the  curse  of  inaccuracy." 
spot.  One  blunder  was  in  stating  the  history  |  Another  charge  shows  General  Butler's 
of  Lead  Statuary,  which  he  made  a  chief  item  j  gross  ignorance  of  our  tariff  legislation,  in  a 
in  his  indictment  of  Mr.  James,  of  Liverpool,  j  House  of  Representatives  which  contained 
and  Mr.  AVilHam  E.  Dodge,  of  New  York.  The  '  not  one  member  to  correct  him.  It  relates  to 
whole  story  of  Lead  Statuary,  one  of  the  most  the  same  firm,  which  is  his  hete  noir,  but 
amusing  chapters  in  economic  history,  was  bears  hardest  upon  the  late  Secretary  Fes- 
recited  a  few  weeks  ago  for  the  readers  of  the  i  senden,  who  is  accused  of  a  department  de- 
World  by  David  A.  Wells,  one  of  our  fore-  j  cision  which  defrauded  the  country  of 
most  writers  on  this  class  of  subjects.  It ;  more  than  $32,000,000  duties.  The  charge 
"confutes  Butler  at  every  point.     The  General  i  we  quote : 

is  a  subscriber  to  the  World  and  ^ ought  [  ..The  duty  upon  tin  plates  at  that  time  was  25 
to    have    neglected  no  such  jneans  of  grace  .  per  cent,  ad  valorem,  which  would  be  about   1)^ 


AN  EXTRAORDINARY  HISTORY. 


211 


cents  per  pound.  It  was  the  intention  of  Congress 
to  increase  it ;  therefore  they  enacted  that  'on  tin 
plates  and  iron  galvanized  or  coated,'  &c.,  there 
should  be  a  duty  of  2'i  cents  a  pound.  But  Mr. 
William  E.  Dodj^e  went  to  the  Treasury  Depart- 
ment of  the  United  States,  in  his  own  person,  as 
I  have  the  means  of  showing,  and  there  advocated 
a  reading  of  that  law  which  was  sanctioned  neither 
by  the  letter,  text,  spirit,  nor  meaning,  nor  by  the 
true  and  just  thought  of  any  patriot.  He  procured 
an  opinion  from  the  Treasury  Department  by  which 
the  comma  was  construed  to  be  removed  after  the 
word  'plates'  and  inserted  after  the  word  'iron,' 
so  as  to  make  it  read  : 

•  On  tin  plates  and  iron,  galvanized  or  coated 
with  any  metal  by  electric  batteries  or  otherwise, 
2}a  cents  a  pound."' 

So  that,  with  that  construction,  the  duty  had 
not  been  raised  on  tin  plates  at  all.  but  only  on 
'  galvanized  '  tin  plates.  Who  ever  heard  of  a  gal- 
vanized tin  plate  ?  None  was  ever  iuiporied,  I 
venture  to  say,  or  ever  will  be.  The  conscqiionce 
was  that  all  the  tin  plates  imported  into  the  United 
States,  of  which  Phelps,  Dodge  &  Co.  were  by 
far  the  largest  importers,  caine  in  at  25  per  cent. 
ad  valorem  instead  of  U'a  cents  a  pouud,  which 
was  a  very  large  increase  of  duty. 


Whether  that  average  value  is  precisely  correct 
or  not  is  of  no  con8equenc'%  because  it  would  not 
substantiiilly  vary  the  figures,  and  that  shows  that 
in  1870--71,  aiul  every  other  year  from  1864  until 
the  change  of  the  tjtriff  on  June  6,  1872,  would 
make  a  difference  in  favor  of  Phelps,  Dodge  «fc 
Co.  and  against  the  United  State-,  by  this  change 
of  the  law  at  the  personal  solicitation  of  Williauj 
E.  Dodge  with  the  Treasury  otticers  of  the  I'niied 
States,  of  S2.:M7,0;)0,  and  over  g4.00;).<lX)  annually, 
taking  the  whole  importation  of  the  United  States 
during  that  eight  years." 

Geaerul  Butler's  ignoranco  is  monstrous 
and  ine.xcusuble.  Ho  is  wrong  at  e\ery 
point,  yet  might  liave  corrected  himself  by 
looking  in  the  ConyressioiuU  Globe  Kven  if 
he  knew  nothmg  of  the  history  of  tJtriffs.  he 
should  have  read  the  history  of  the  act  which 
he  accuses  Secretary  Fesseudoii  of  miscon- 
struing, and  that  would  have  oiwued  liis 
eyes.  So  small  a  precaution  against  in- 
accuracy this  foremost  Kepublicau  Icjider  did 
not  take. 

In  the  first  place  his  argument  implies  that 
on  tin  plates  it  was  the  purpose  of  Congress 
to  more  than  double  the  duty  by  the  Act  of 
June  30,  1864.  There  is  not  the  slightest 
foundation  for  sucli  an  assutnption  in  the  de- 
bates of  the  House  or  the  Senate,  and  no 
sucii  charge  could  have  ijcen  drciimedof  and 
proposed  by  the  Ways  and  Means  or  Finance 
Committee  without  sharp  debate  in  both 
houses.  Was  there  noljody  to  tell  Mr.  Butler 
that,  and  to  show  him  that  twenty-two  shil- 
lings for  a  lx)x  of  1'25  lbs.  tin  is  a  fraction 
over  4^  cents  per  pound  first  cost  for  tin 
plates,  and  that  2^  cents  per  lb.  duty  levied 
thereon,  "  in  lieu  of  the  duties  heretofore  im- 
posed by  law,"  if  applied  to  tin  plates,  which. 


in  fact,  are  not  mentioned  in  the  Act,  would 
therefore  have  heen  an  increase  from  twenty- 
five  percent,  duty  to  fifty-nine  per  cent,  duty  ? 
But  the  absurdity  of  Congress  increasing  the 
duty  on  tin  plates  more  than  100  per  cent,  at 
a  sitting  does  not  dawn  on  General  Butler. 

In  the  second  place,  whether  tin  plates  are 
taxed  twenty-five  per  cent,  or  fifty-nine  per 
cent.,  or  whether  bunting  is  taxed  thirty  per 
cent,  or  one  limidred  and  eight  per  cent.,  the 
consumer  equally  has  to  pjiy  the  duties.  Of 
course  less  is  consumed  at  a  higher  than  a 
lower  duty,  and  in  this  way  does  the  imj)orter 
find  his  account  in  the  lower  duty.  In  this 
very  case  had  the  duty  on  tin  plates  Ijcen 
raised  suddeDly  from  twenty-five  per  cent,  to 
fifty-nine  i  er  cent.,  according  to  General  But- 
ler's own  showing,  a  tinn  importing  some 
600,000  boxes  of  tin  plates  antuially,  and  ac- 
cording t<>  the  rule  of  trade  no  doubt  carrying 
over  150,000  Ixjxes  in  stock,  would  on  their 
stock  have  made  fully  $300,000  in  the  differ- 
ence of  duties,  in  the  same  way  in  which  the 
wine  imix)rter8  hoped  to  profit  In-  the  increase 
of  duty  on  wine;  and  had  Mr.  Dodge  solicited 
the  Secretary  of  the  Treasury  to  rule  the  2  J 
cents  duty  inst«id  of  the  twenty-five  per 
cent,  we  should  have  l)een  justified  in  sus- 
pecting Mr.  Dodge  of  trying  to  Ijenefit  himself 
at  the  expense  of  the  consumers  of  tin. 

But,  more  conclusive  still,  the  Congres- 
sional Globe,  June  16.  1864,  p.  3,011,  shows 
that  SecreUtrj'  Fessenden's  reading  of  the  law 
was  precisely  the  correct  reading,  sanctioned 
"  by  the  letter,  text,  spirit  and  meaning,''  and 
what  18  more,  that  Senator  Fessendcn  was  at 
the  time  of  the  debates  on  the  bill  the  Chair- 
man of  the  Finance  Conunittee  of  the  Senate, 
and  himself  moved  and  wirried  the  very 
amendment  which  he  afterwards  interpreted 
as  Secretary  of  the  Treasury  in  the  sense  that 
Mr,  Butler  finds  not  sanctioned  by  the  "  true 
and  just  thought  of  any  patriot." 

The  clause  as  it  came  from  the  House  read 
thus  (as  it  may  be  reconstructed  from  the 
amendments  following  l)elow): 

"On  galvanized  tin  plates,  galvanized  iron,  or 
iron  coated  witli  any  meUl  by  electric  batteries,  2] 
cents  per  pound." 

[From  the  Globe,] 

"  The  next  amendment  of  the  Committee  was  in 
section  three,  line  forty-nine,  after  the  word  'on,' 
to  btrike  out  the  word  'gaivanized;'  after  the  word 
•pUites  '  t )  strike  out  the  words  *  g:ilvanized  iron  :' 
after  the  word  '  iron  '  to  insert  the  words  •  galvan- 
ized or  :'  and  in  line  fifty,  after  the  word  '  batteries' 
to  insert  'or  otherwise  ;'  so  that  the  clause  will 
read: 

'On  tin  plates, or  iron  galvanized  or  coated  with 
any  metal  by   electric  batteries  or  otherwise,  2j 
cents  per  pound.' 
The  amendment  was  agreed  to. 


212 


CONGRESS  AND  PHELPS,  DODGE  &   CO. 


Mr.    Fessenden— I  will   move     to    amend 
clause  further  in  the  forty-ninth  line, 
out  the  word  'or'  and  inserting'  and;'   so  as  to 
read  '  tin  plates  and  iron  galvanized.'' 

The  amendment  was  agreed  to." 

The  Globe  record  thus  shows  that  galvan- 
ized tin  plates  were  alone  referred  to,  and 
that  although  the  comma  after  "  phites  '"  was 
by  an  error  left  in  the  tirst  amended  clause,  as 
given  in  the  record,  and  also  in  the  law,  the 
comma  was  omitted  in  Senator  Fesseviden's 
linal  amendment  in  the  record,  and  nobody  in 
the  Senate  or  out  of  it  ever  thought  of  doub- 
ling the  duly  on  tin  plates,  or  doing  anything 
but  make  galvanized  tin  and  iron  plates  pay  a 
duty  of  2^  cents  a  pound.  Secretary  Fessen- 
don  was  thus  construing  Senator  Fessenden, 
and  the  record  shows  he  construed  him  prop- 
erly. 

But  the  grossest  blunder  of  Butler  was 
when  he  asked:  "Who  ever  heard  of  a  gal- 
vanized tin  place?  None  was  ever  miported, 
I  venture  to  say,  or  ever  will  be." 

So  that  his  argument  was,  that  Secretary 
Fessenden,  by  transposing  a  comma,  relieved 
tin  plates  of  increased  duty  by  inventing  a 
class  of  an  article  unknown  to  our  tariffs  and 
non-existent.  Had  General  Butler  taken  the 
pains  to  scan  the  tariffs  imposed  by  the  acts 
of  Congress  of  March  '61,  August  '61,  De- 
cember '61,  July  '62,  March  '63,  all  of  which 
preceded  tlie  tariff  into  which  he  supposes 
Secretary  Fessenden  to  have  foisted  a  new 
item,  he  would  have  found  "Tin.  in  plates  or 
sheets,"  bearing  a  varying  ad  valorem  duty 
highest  at  25  per  cent.,  and  "  Tin  plates,  gal- 
vanized or  coated  with  any  metal,  a  specific 
duty  of  2  or  2^4,  cents  a  pound."  Thus  it  is 
not'  Secretary  Fessenden  who  was  too  com- 
pliant. It  is  General  Butler  who  has  blun- 
dered. 

The  history  of  the  matter  is  this.     At  the 


"",<^"<^.  tl^»tl  instance  of  the  iron  manufacturers  a  high 
r'^eo  "s'"o  !  ^}^^y  ^^^  '-^^^^y  Pliiced  on  sheet  iron  and  all 
like  articles,  galvanized  sheet  iron  (iron  coated 
with  zinc  by  a  chemical  process)  among  the 
number.  Several  years  ago  an  English  firm 
importing  galvanized  iron,  whose  trade  had 
been  injured  by  the  high  duty,  had  a  small 
Etmount  of  pig  tin  mixed  with  the  zinc  coating 
of  their  iron,  and  entered  it  at  the  Custom 
House  as  galvanized  tin  plates,  claiming  to  pay 
only  the  lower  duty  on  tin  plates,  instead  of 
the  higher  duty  oh  galvanized  sheet  iron. 
This  evasion  was  resisted  at  the  Custom 
House,  and  finally  the  contest  resulted  in  tlie 
insertion  of  a  definite  clause  in  every  subse- 
quent taiiff  since  186 1,  and  not  merely  now  for 
the  tirst  time  in  the  Act  of  June  30,  1864, 
making  besides  the  regular  item  of  tin  plates 
a  distinct  duty  on  galvanized  tin  plates,  the 
same  as  on  galvanized  iron  plates.  Even  in 
the  Act  of  March  3,  1857,  tin  plates  are  dis- 
criminated as  "  galvanized  or  ungalvanized," 
showing  that  the  facts  were  then  known  to 
the  Treasury  Department.  The  distinction  is 
preserved  in  1861:  section  19,  tin  jDlates,  10 
per  cent,  ad  valorem ;  section  7,  on  tin  plates 
galvanized  or  galvanized  iron,  etc.,  2  cents 
per  pound.  In  the  act  of  1862,  section  2  and 
section  8,  preserves  the  same  contrast.  In 
the  act  of  1864,  tin  plates  are  not  mentioned 
but  the  "  tin  plates  galvanized  or  galvanized 
iron "  clause  got  reconstructed,  as  shown 
above,  into  "  On  tin  plates  and  iron,  galvanized, 
etc.,"  where  a  misplaced  comma  elicited  Sec- 
retary Fessenden's  decision  and  General  But- 
ler's blunder.  But  the  point  is  that  not  a 
member  of  the  Forty-third  Congress,  many  of 
them  anxious  to  catch  him  tripping,  not  a 
member  of  the  Committee  on  Ways  and 
Means,  knew  enough  to  expose  Butler's 
blunder  on  the  spot. 


CONTINUATION    OF    GENERAL    BUTLER's    REMARKS. 

Such  being  the  undeniable  recorded  facts  in  regard  to  Phelps,  Dodge  & 
Co.,  what  was  the  special  agent  of  the  Treasury  to  believe  when  he  found 
them  charged  with  fraud,  especially  when  false  and  double  invoices  were 
produced  to  him  in  December,  1872?  Why,  he  could  not  but  believe  that 
these  men  were  continuing  to  take  all  manner  of  unfair,  fraudulent  and 
swindling  advantages  of  the  Government,  and  doubtless  he  examined  their 
books  with  that  belief.  And  what  did  he  find  ?  He  found  that  they  had  a 
corresponding  house  in  Liverpool,  and  that  that  house  was  engaged  in  con- 
signing invoices  of  tin  plates  to  the  house  of  Phelps,  Dodge  &  Co.  in  this 
country  daily,  and  sometimes  three  and  four  invoices  per  day;  that  in  every 


AN  EXTRAORDINARY  HISTORY.  213 

case  those  invoices  were  sworn  to  as  a  purchaser's  invoice — that  is,  that 
tlie  floods  had  been  purchased  in  open  market  by  the  house  of  Phelps,  James 
&  Co.,  and  that  the  prices  annexed  to  the  articles  therein  were  the  true  and 
genuine  prices  paid  for  them.  But  lie  found  that  in  the  only  kind  of  tin 
plates  in  which  they  could  cheat — because  the  prices  of  the  ordinary  kind 
of  tin  plates  were  as  staple  as  gold  eagles  would  have  been  if  imported  by 
that  firm — in  every  instance  they  had  a  double  invoice  from  the  manufac- 
turer, and  that  those  specially  large  sizes  of  tin  were  not  purchased  by 
Phelps,  Dodge  &  Co.  or  Phelps,  James  &  Co.  in  open  market  at  all,  but  were 
manufactured  for  those  firms,  which  are  one  and  the  same  firm;  and  that  in 
every  instance,  when  they  swore  that  they  had  bought  these  articles  in 
open  market,  they  swore  falsely,  and  knew  it,  because  they  knew  the  article 
^as  manufactured  to  order  for  their  firm,  and  they  .should  have  sworn  to 
the  cost  price  of  the  manufactured  article,  which  he  found  each  time  had 
been  in  the  possession  of  the  firm  before  the  oath  was  made,  and  it  was  a 
higher  cost  than  the  invoice  price  to  which  they  made  oath.  So  that  they 
and  those  whom  they  employed  had  been  guilty  of  deliberate  and  corrMi>t 
perjury  every  day  in  the  year  and  every  year  of  our  Lord  for  the  five  dur- 
ing which  the  law  allowed  the  oflBcer  to  look  back.  And  he  found  the  evi- 
dence of  that  in  this:  That  every  one  of  these  Custom  llt»use  invoices,  of 
which  they  had  duplicates  in  the  books  of  the  firm,  had  u  thin  paper  copy 
of  the  true  manufacturer's  cost  pasted  over  it,  in  order  that  the  firm  might 
know  how  to  sell  at  a  proper  price  the  goods  which  they  had  under  valu^  d 
so  as  to  smuggle  them  by  false  invoices  into  the  country. 

Under  the.se  circumstances  the  .special  agent  reported  to  the  Srcretary  of 
the  Treasury  the  facts.  Mr.  William  E.  Dodge  employed  four  lawyer.*^ — iMi- 
Abrara  Wakeman,  a  former  Surveyor  of  the  Port  of  New  York,  and  a  learned 
lawyer  in  revenue  law;  Mr.  Henry  E.  Knox,  candidate  for  Supreme  Judge 
of  "New  York;  Judge  Fullerton,  the  foremost  criminal  lawyer  in  the  City  of 
New  York,  with  a  gentleman  who  had  been  an  Attorney  General  of  the 
United  States,  as  consulting  counsel;  and  those  lawyers,  after  examining 
his  case  carefully  for  six  weeks,  advised  him  three  times  over  to  ofi'er  to  pay 
the  value  of  every  falsified  invoice  article;  which  falsified  invoice;  articles 
amounted  to  more  than  a  quarter  of  a  million  of  dollars — $271,000 — to  ge^ 
released  from  these  frauds,  and  Mr.  William  E.Dodge  and  his  partner.*, 
after  fall  consultation,  agreed  to  that  proposition,  nay,  ardently  desired  it, 
and  made  a  written  statement  to  the  Secretary  of  the  Treasury  that  on 
account  of  "  certain  irregularities"  which  had  been  found  in  their  business, 
tliey  were  willing  to  pay  §271,000  to  compromise  a  suit  which  the  district 
attorney  in  the  mean  time  had,  at  their  request,  brought  against  them  for 
a  million  dollars,  or  less  th.ui  two  thirds  of  the  whole  amount  of  their  tainted 


214  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

or  fraudulent  invoices,  Tliat  suit  was  brought  in  tliat  form  at  the  request 
of  tlie  counsel  of  Dodge,  after  the  com])roniise  had  been  agreed  upon,  in 
order  that  when  that  c  nnproniise  sliould  be  accepted  it  might  cover  every 
(^laiiu  for  penalties  against  Phelps,  Dodge  &  Co. 

When  the  letter  offering  to  pay  that  great  sum  came  to  the  Secretary  of 
the  Treasury,  George  S.  Boutwell,  he  wrote  back  in  substance — all  of  which 
will  be  found  in  the  testimony — "I  cannot  accept  this  compromise.  T  will 
not  be  put  in  the  position  which  that  offer  will  put  me,  of  being  a  black 
mailer.  Either  you  have  committed  fraud  or  you  have  not  committed  fraud. 
If  you  have  not  committed  fraud,  you  should  not  pay  the  Government  any- 
thing. I  will  consider  the  question  of  compromise,  but  I  cannot  compro- 
mise under  your  statement  that  you  are  guilty  of  irregularities  only." 
Th('reu|)on  that  offer  was  modified  by  Phelps,  Dodge  &  Co-,  after  consulta- 
tion -with  their  four  eminent  counsel,  who  advised  their  client  to  plead 
guilty  to  a  suit  charging  them  with  importing  goods  to  a  million  dollars  in 
value  by  false  invoices  and  fraudulent  appliances;  and  thereupon  Phelps, 
l)odge  &  Co  sent  an  offer  of  compromise,  admitting  their  guilt  individually 
and  collectively,  and  renewing  their  offer  to  pay  the  $271,000;  and  while 
the  Secretary  of  the  Treasury  was  considering  it  they  withdrew  the  offer. 

Meantime  the  matter  had  got  into  the  newspapers;  the  Christian  Asso- 
ciation, of  which  Mr.  William  E.  Dodge  was  a  burning  and  a  shining  light, 
began  to  inquire.  What  manner  of  man  is  this,  who  makes  long  sermons  by 
(lay  and  prayers  by  night  in  the  temples  while  his  partners  in  business  are 
i'.ccii Ululating  his  profits  by  daily  and  hourly  perjuries  and  frauds  upon  the 
(jovernment?  And  William  E.Dodge  wrote,  as  the  testimony  shows,  to 
George  S.  Boutwell,  and  said  to  liiin  in  substance,  •' I  withdraw  my  offer  of 
compromise."  He  expected  the  Secretary  to  reply  to  that,  "I  cannot  per- 
mit the  withdrawal,  as  the  matter  is  closed."  Then  Dodge  would  doubt- 
less have  gone  away  and  said,  "The  compromise  was  inadvertently  made, 
and  when  I  went  to  withdraw  it  the  Secretary  took  a  snap  judgment  upon 
me."  But  the  Secretary,  with  his  usual  straightforwardness,  wrote  in  sub- 
stance: "Very  well;  if  you  think  you  are  not  guilty  withdraw  your  com- 
promise and  go  to  a  jury."  So  the  compromise  was  withdrawn.  There- 
upon Dodge  consults  again  with  his  four  lawyers,  and  after  nearly  two 
weeks'  delay  he  renews  the  offer  and  the  money  is  paid.  In  order  to  break 
his  fall  he  says  to  the  Secretary,  "The  Government  officers  think  that  I 
ought  not  to  withdraw  the  compromise;  they  having  once  accepted  it  I  am 
bound  to  carry  it  out."  What  was  the  manly,  and  honorable,  and  straight- 
forward answer  to  that  of  the  Secretary  of  the  Treasury  ?  It  was,  "  Mr. 
Dodge,  if  your  action  in  renewing  the  proposition  has  been  influenced  by 
this  representation,  you  will  have  an  opportunity  to  consider  the  subject 


AN  EXTRAORDINARY  HI8T0RY.  215 

anew  and  take  such  course  as  you  may  think  proper  before  final  action  by 
this  department."  Finding  no  subterfuge  would  avail,  Mr.  William  E.  Dodge, 
with  his  four  lawyers  behind  him,  after  weeks  of  such  consultation  and 
such  shifts  and  such  attempts  at  eva.sion  as  I  have  described,  deliberately 
put  on  file  a  written  statement  admitting  that  his  firm  were  guilty  of  the 
charges  in  suit;  that  by  these  false  and  fraudulent  invoices  the  revenue 
had  been  defrauded;  and  paid  $271,000  in  expiation  of  that  guilt. 

The  Speaker, — The  hour  of  the  gentleman  has  expired. 

Mr.  Beck. — There  are  a  number  of  gentlemen  who  want  to  speak;  I  am 
pretty  early  on  the  list^  my.self.  I  am  pt3rfectly  willing  that  half  of  my 
time  should  be  taken  by  the  gentleman  from  Massachusetts  (Mr.  Butler). 

Mr.  Ellis  H.  UonRRrs. — I  want  to  have  it  understood  whether  this  argu- 
ment is  to  be  all  on  one  side,  and  all  to  be  made  by  the  gentleman  from 
Massachusetts. 

Mr.  Butler,  of  Massachusetts. — It  is  a  great  deal  like  the  argument  of  the 
Committee  a  few  days  ago;  they  had  two  days. 

Mr.  Ellis  H.  Roberts. — The  gentleman  from  Massachusetts  had  been 
three  times  invited  to  bo  present  and  take  part  in  the  discussion.  All  I 
desire  to  know  is  whether  or  not  other  gentlemen  are  to  succeed  the  gen- 
tleman from  Massachusetts,  or  will  members  of  the  Committee  on  Ways 
and  Means  have  an  opportunity  to  be  heard  ? 

Cries  of  "Go  on — go  on  !" 

Mr.  Butler,  of  Massachusetts. — I  am  in  the  hands  of  the  Uouse. 

Mr.  Ellis  H.  Roberts. — I  do  not  object  to  the  gentleman's  going  on,  but 
desire  to  have  it  understood  that  there  are  two  gentlemen  other  than  mem- 
bers of  the  Committee  on  Ways  and  Means  who  are  to  speak  after  the  gentle- 
man from  Massachusetts  gets  through,  and  before  any  member  of  the 
Committee  on  Ways  and  Means  can  be  heard. 

Mr.  Butler,  of  Massachusetts. — I  do  not  care  who  speaks  after  me. 

Mr.  Foster. — We  want  this  matter  understood.  If  those  two  gentlemen 
who  have  the  floor  after  the  gentleman  from  Massachusetts  gets  through 
are  to  speak  an  hour  each,  that  will  make  a  great  difference. 

Mr.  Butler,  of  Massachusetts. — I  do  not  know  how  long  they  will  speak, 
but  if  you  will  allow  me  to  go  on  we  are  wasting  good  time  here. 

The  Speaker. — The  gentleman  from  Massachusetts  is  not  entitled  to  the 
floor  any  longer,  except  by  some  arrangement  that  may  be  made.  The 
rules  of  the  House  are  specific  that  no  gentleman  shall  speak  more  than  one 
hour. 

Mr.  Foster. — Who  will  follow  the  gentleman  from  Massachusetts  ? 

The  Speaker. — There  has  been  a  list  made  out — — 

Mr.  Cobb,  of  Kansas. — I  move  to  suspend  the  rules,  in  order  that  the  time 
of  the  gentleman  from  Massachusetts  may  be  extended. 


216  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Tlie  Speaker. — The  gentleman  has  not  the  floor  for  that  purpose. 

Mr.  Foster. — I  want  to  have  this  thing  understood. 

Mr.  Butler,  of  Massachusetts. — I  want  it  understood,  too. 

Mr.  Foster. — I  do  not  object 

Mr.  Butler,  of  Massachusetts. — Wliy  do  not  you  keep  quiet,  then  ? 

The  Speaker. — The  Chair  thinks  that  it  would  be  only  the  ordinary  fair- 
ness of  debate  that  members  of  the  Committee  on  Ways  and  Means  should 
have  the  right  to  follow  the  gentleman  from  Massachusetts. 

Mr.  Butler,  of  Massachusetts. — ^^I  have  no  objection  to  that;  I  only  wish 
they  would  not  interrupt  me  now. 

Mr.  Maynard. — I  would  ask  the  gentleman  from  Massachusetts  how  much 
more  time  he  wants  ? 

Mr.  Butler,  of  Massachusetts. — Not  much  more,  but  I  do  not  want  to 
feel  cramped  for  time. 

Mr.  Maynard. — Then  I  move  to  suspend  the  rules,  so  that  the  gentleman 
from  Massachusetts  may  have  another  hour. 

The  motion  to  suspend  the  rules  was  seconded,  and  (two  thirds  voting 
in  favor  thereof)  the  rules  were  suspended. 

[The  announcement  of  the  result  was  greeted  by  applause  on  the  floor 
and  in  the  gallery.] 

The  Speaker — .It  is  a  gross  infraction  of  the  rules  of  the  House  and  of 
decency  for  the  galleries  to  manifest  approbation  or  disapprobation  of  any 
action  of  members  of  this  House,  and  the  Chair  will  put  in  active  efi"ect 
his  power  to  clear  the  galleries  if  this  is  repeated.  The  slightest  mani- 
festation of  applause  or  disapprobation  will  cause  the  galleries  to  be 
cleared. 

Mr.  Butler,  of  Massachusetts. — Phelps,  Dodge  &  Co.  paid  the  $271,000  in 
expiation  of  that  guilt,  and  yet  we  are  told  "all  merchants  are  honest," 
and  Phelps,  Dodge  &  Co.  are  the  very  princes  of  merchants.  Nay,  Mr. 
William  E.  Dodge  claims  he  comes  here  before  your  Committee,  as  I  under- 
stand, as  President  of  the  Chamber  of  Commerce  of  the  City  of  New 
York,  as  the  exemplar  of  the  merchant,  as  a  dealer  in  hardware,  ties  up 
his  goods  and  puts  a  specimen  pair  of  shears  on  the  outside,  so  that  we 
may  know  the  quality  of  the  cutting  instrument  inside  without  opening 
the  package. 

Gen.  Butler,  then  took  up  the  subject  and  defended  at  length  the  "  San- 
born contracts"  and  the  Treasury.  What  the  character  of  the  defence 
was,  and  also  the  general  bearing  of  the  speaker,  may  be  inferred  from  the 
following  further  extracts  from  his  remarks  : 

The  Committee  on  Ways  and  Means  have  spent  several  months  and  a 
large  amount  of  money  in  seeming  examination  of  the  question  of  the  pro- 


AN  EXTRAORDINARY  HISTORY.  217 

priety  of  the  law,  aud  if  that  time  and  money  were  spent  in  good  faith  to 
ascertain  whether  the  law  of  May  8,  1872,  giving  the  moiety  contracts  to 
those  who  sliould  collect  old  debts  ought  to  be  repealed,  it  may  have  been 
well  spent.  If,  on  the  contrary,  this  apparent  pii|rpose  of  investigation  has 
only  been  to  cloak  another  and  a  diflferent  one,  carried  on  for  political  and 
personal  purposes  only,  then  the  Committee  and  the  House  may  find  that 
they  have  been  made  in  this  matter  simply  instruments  to  pander  to  the 
rivalries,  hates  and  ambitions  of  politicians,  instead  of  carrying  on  a  great 
work  of  necessary  legislation. 

I  have  some  evidence  showing  that  the  whole  Sanborn  contract 
investigation  was  gotten  up  not  exactly  for  those  objects  and  those 
designs  which  wise  legislators  and  grave  statesmen  would  willingly 
avow. 

The  first  the  country  heard  anything  about  these  Sanborn  contracts  was 
that  Mr.  Sanborn  was  being  indicted  in  Brooklyn  by  the  district  attorney 
of  that  district,  one  Tenney,  about  the  1st  of  Febmary  last.  As  soon  as 
that  was  done  and  duly  trumpeted  in  the  opposition  newspapers,  Mr.  Ten- 
ney, an  ofiiceholder  under  a  republican  administration,  and  claiming  to  be 
a  republican  himself,  sent  his  assistant  district  attorney  here  to  one  of  the 
Committee  on  Ways  and  Means,  a  leading  democratic  member  of  the 
House,  to  have  him  bring  the  Sanborn  contract  matter  "  to  the  front,"  Ten- 
ney having  furnished  him  with  the  Brooklyn  democratic  papers,  which 
gave  flaming  and  laudatory  accounts  of  Mr.  Tenney's  able  endeavors,  as 
they  termed  it,  to  ferret  out  a  great  fraud  on  the  Government.  One  item 
of  evidence  that  1  have  of  this  fact  is  a  letter  of  direction  to  his  a.«sistant, 
written  by  Tenney  to  his  assistant,  which  I  send  to  the  Clerk  to  be 
read. 

The  Clerk  then  read  as  follows  : 

Law  Offices  op  Tewey  k  Holt,  } 
178  Broadway,  New  York,  February  6,  1874.  f 

Friend  Hughes. — Do  not  fail  to  see  Hon.  James  B.  Beck.  He  is  a  democratic  member 
from  Kentucky.  He  is  member  also  of  the  Committee  on  Ways  and  Means.  I  have  to-day 
sent  him  Union  aud  Eagle.  He  is  a  powerful  member  of  the  democratic  party,  and  will  bring 
this  Sanborn  matter  to  the  front.     I  think  no  news  specially. 

Yours,  Ac, 

TENNEY. 

Mr.  Butler,  of  Massachusetts — Now,  if  republican  officeholders  will 
put  ammunition  into  the  hands  of  democratic  members  on  the  Committee 
on  Ways  and  Means  with  which  to  attack  and  break  down  the  republican 
administration,  far  be  it  from  me  to  say  one  word  in  animadversion  upon 


218  CONGRESS  AND  PHELPS,  DODGE  &  CO 


the  conduct  of  that  democratic  member  of  the  House  who  should  make  the 
best  use  he  can  of  that  information  for  that  object. 

But  what  shall  we  say  of  a  republican  majority  of  a  Committee  on  Ways 
and  Means  who  shall  allow  themselves  to  be  made  the  tools  of  an  oppo- 
sition member,  to  find  him  ammunition  with  which  to  wound,  if  not  kill 
their  own  administration,  if  the  only  inducement  to  what  they  did  was 
being  blindly  led  by  the  superior  wiliness  of  their  democratic  associate  ? 
But  was  that  the  mainspring  of  action  on  the  part  of  all  the  republican 
members  of  the  Committee  ?  Fourteen  days  after,  to  wit,  the  20th  of  Feb- 
ruary, a  letter  was  sent  by  the  gentleman  from  Ohio,  who  reported  the 
abrogation  of  the  Sanborn  contracts  from  the  Committee  on  Ways  and 
Means,  to  Supervisor  Harmon,  of  Brooklyn,  New  York,  the  substance 
of  which  was  sent  to  me  under  the  heading  "  Copy  of  a  letter  picked  up  in 
the  streets  of  Brooklyn,  l^ew  York,"  which  is  as  follows  : 

"As  a  member  of  the  Committee  on  Ways  and  Means  he  (Foster)  had 
discovered  the  existence  of  the  Sanborn  contracts.  At  the  same  time  he 
learned  that  indictments  bad  been  found  in  Brooklyn  ;  that  he  prepared 
and  offered  the  resolution  calling  on  the  Secretary  for  information  ;  that  he 
offered  the  resolution  and  General  Butler  objected  to  it.  After  this  Butler 
came  to  him  and  asked  him  to  offer  the  resolution  again  before  the  follow- 
ing Monday,  expecting  Butler  to  make  a  speech  on  it.  In  the  meanwhile 
he  (Foster)  and  General  Woodford  had  agreed  to  reply  to  such  speech  if 
made  and  attack  Butler  ;  but  General  Butler  withdrew  his  objection  and 
said  he  hoped  the  House  would  pass  the  resolution,  which  surprised  him 
and  Woodford,  especially  himself,  ^  as  he  had  prepared  himself  to  rap  old 
Cock-eye  J  " 

Here  you  have  the  substance  of  a  genuine  letter,  which  the  gentleman 
from  Ohio  will  not  deny,  especially  the  last  phrase,  because  I  told  him  one 
day  that  whatever  he  might  say  of  me  behind  my  back  I  wished  he  would 
not  write  of  me  that  way,  and  I  do  not  believe  he  will  again. 

Now,  what  could  the  gentleman  from  Ohio  desire  to  **  rap  old  cock-eye" 
for?  What  had  he  done  to  the  gentleman  from  Ohio  ?  Had  he  ever  inter- 
fered with  him?  Had  he  ever  said  an  unkind  word  to  him,  or  of  or  con- 
cerning him?  I  aver,  from  an  intimate  knowledge  of  that  unfortunate 
individual  with  the  defect  in  his  eye,  so  delicately  alluded  to,  that  he  had 
never  entertained  for  that  gentleman  any  but  the  kindest  feeling.  What 
personal  grief  he  had,  alas  !  \  know  not.  From  the  time  I  got  that  letter  I 
was  utterly  puzzled  to  know  my  imputed  offence  ;  but  I  got  certain  infor- 
mation, Mr.  Speaker,  afterward,  embodied  in  the  sworn  testimony  voluntarily 
sent  me  by  the  affiant,  which  the  Clerk  will  read. 

The  Clerk  read  as  follows  ; 


AN  EXTRAORDINARY  HISTORY.  219 

City  of  Washington,  District  of  Columbia. 

Warwick  Martin,  of  the  City  of  New  York,  being  first  duly  sworn,  on  oatli  deposes  and 
says: 

Being  acquainted  with  some  of  the  claims  cmbraced'in  the  so-called  Sanborn  contracts,  I, 
after  the  investigation  commenced  in  tlie  Committee  on  Ways  and  Means,  addressed  Hon. 
Henry  L.  Dawes  and  Hon.  Fernando  Wood,  of  said  Committee,  requestmg  to  bo  summoned 
to  testify  in  said  case.  I  was  not  summoned ;  but  having  business  in  Washington.  I  came 
here  on  the  9th  of  April,  1874.  and  concluded  to  appear  before  said  Committee  and  testify, 
if  permitted  so  to  do.  I  stopped  at  the  Ebbitt  House,  and  there  saw  Mr.  Dawes,  and  informed 
him  of  my  wish  to  appear  before  the  Committee.  He  said  I  should  be  permitted  to  so 
testify.  Afterward,  on  the  same  day,  at  the  committee  room,  Mr.  Dawes  notified  me  to  be 
present  in  said  room  on  the  following  morning  at  ten  o'clock.  I  was  in  said  room  promptly 
at  the  time  named.  On  my  arrival  at  said  room  only  one  gentlemen  of  the  Committee  was 
present,  whom  I  learned  to  be  Hon.  Charles  Foster.  Another  gentleman  whom  I  did  not 
know,  but  wlio  I  supposed  was  a  member  of  the  Committee,  came  into  said  room  soon  after 
my  arrival,  and  he  and  Mr.  Foster  commenced  conversation. 

Mr.  Foster  said  to  him,  in  language  which  I  distinctly  heard,  that  the  object  with  which 
he  commenced  this  investigation,  or  one  object,  was  to  find  something  against  Ben.  Butler ; 
that  said  Butler  had  written  a  letter  to  his  district  to  defeat  his  election,  and  he  wished  to 
get  even  witli  him,  or  words  to  that  effect. 

On  the  following  day,  the  11th  of  April,  Mr.  Foster  came  up  and  spoke  to  me  at  the 
Ebbitt  House,  where  we  were  both  stoppiug.  He  and  I  had  a  short  conversation,  during 
which  the  name  of  General  Butler  was  mentioned,  I  having,  as  I  now  remember,  stated  tliat 
the  committee  seemed  to  be  investigating  General  Butler  instead  of  the  law  of  May  8.  1872. 
and  the  contracts  thereunder.  Mr.  Foster  stated  in  reply,  " Damn  Butler;  he  ought  to  be 
investigated ;  all  the  men  connected  witli  these  contracts  are  Butler's  friends,  and  you  are 
his  friend  also,  and  saw  him  last  night,  and  told  him  what  I  said  In  the  committee  room  yes- 
terday about  him,"  or  words  to  this  effect.  J  then  stated  to  Mr.  Foster  that  ho  was  mis- 
taken ;  that  I  Imd  never  enjoyed  the  pleasure  of  an  introduction  to,  or  an  acquaintance  with 
General  Butler ;  that  I  had  not  seen  him  on  the  evening  named,  or  at  any  other  time,  to 
converse  with  him.  I  add  that  t?ii8  is  true  still.  I  have  never  been  unfriendly  to  General 
Butler,  but  have  admired  him  for  many  things,  and  o.specially  for  the  fact  that  ho  hag  always 
been  in  favor  of  compelling  wealthy  men,  capitalists  and  corporations,  to  pay  what 
they  owe  the  Government,  instead  of  taxing  the  poor,  the  Industrious,  and  tlio  honest 
farmers,  mechanics  and  laboring  men  to  make  good  tho  deflciencios  of  the  rich. 

I  so  stated  to  Mr.  Foster,  and  added  that  I  tliought  this  one  question  was  all  there  was  in 
the  so-called  Sanborn  case. 

WARWICK  MARTIN. 

Sworn  to  and  subscribed  before  me  this  20th  day  of  May,  A.  D,  1874, 
[seal.]  H.  W.  Brelsford, 

Notary  Fuhlic,  District  of  Columbia, 
Mr.  Foster. — In  so  far  as  that  affidavit  makes  the  charp^e  that  I  wanted  to 
investigate  General  Butler,  I  pronounce  it  here  now  an  unequivocal  false, 
hood.  The  party  who  makes  it  I  know  is  perfectly  characterless,  and  the 
gentleman  from  Massachusetts  ought  to  know  that  too.  He  is  the  man,  as 
the  gentleman  from  Massachusetts  knows,  who  attempted  to  black  mail  bis 
friend  Sanborn  out  of  several  thousand  dollars. 


220  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Gen.  Butler. — I  could  not  believe  even  the  affidavit  until  I  turned  to  this 
very  voluminous  report,  containini^,  with  the  testimony,  three  hundred  and 
twenty-two  pages,  and  upon  examination  found  no  allusion  whatever  to 
my  humble  self  or  eyes  in  the  report  of  the  committee  upon  the  Sanborn 
contracts,  by  any  designation  whatever;  so  that  I  am  sure  it  turned  out 
that  I  had  nothing  to  do  with  them  whatever,  because  the  gentleman  from 
Ohio  in  the  examination  of  witnesses  alluded  to  me  in  various  forms  of 
questions  thirty-three  times,  and  each  time  he  got  the  answer  that  the  wit- 
ness did  not  know  that  I  did  anything,  or  knew  anything,  or  said  anything 
on  the  subject  of  the  Sanborn  contracts.  Still,  every  time  he  alluded  to  me 
the  New  York  Tribune  published  a  statement  that  General  Butler's  name 
appeared  everywhere  in  the  investigation;  and  this  statement  was  copied 
each  day  into  all  the  Boston  papers  which  are  under  the  control  of  some  of 
my  colleagues  from  Massachusetts,  who  were  endeavoring  to  convince  the 
people  that  I  was  engaged  in  the  affair.  Nay,  my  colleagues'  newspapers 
were  so  put  to  it  for  evidence  of  the  fact  that  they  declared  that  Sanborn's 
lawyer,  Mr.  Prescott,  was  my  private  secretary  and  henchman,  whatever 
that  may  be,  and  cited  as  proof  that  he  had  his  office  with  me,  when  I  am 
told  that  he  once  had  an  office  in  a  four  story  building  where  I  have  mine, 
with  some  twenty  other  tenants.  Let  me  say  that  I  never  saw  Prescott 
three  times  in  my  life,  and  did  not  know  him  by  sight  till  he  was  sent  for 
as  a  witness.  Besides  that,  when  the  gentleman  made  his  speech  he 
alluded  to  me  twenty-eight  times,  making  sixty-one  in  all;  and  then,  after  his 
sixty-one  questions  and  personal  allusions  in  the  examination  and  in  the 
speech,  the  editor  of  the  Tribune  thought  that  my  "  coat  tails"  could  be 
seen  in  the  affair.  And  this  is  the  kind  of  attack  to  which  men  in  public 
life  are  exposed  from  investigations  when  somebody  wants  to  get  even 
with  them. 

Now,  I  have  no  objection  to  being  investigated  by  anybody  and  every- 
body, friends  or  enemies — for  the  more  the  latter  investigate  me  the  worse 
they  will  like  me — but  I  do  object  to  the  public  money  being  spent  for 
that  purpose  under  the  direction  of  the  Committee  on  Ways  and  Means, 
when  they  ought  to  have  been  perfecting  a  finance  measure,  so  that  the 
two  thirds  republican  majority  of  this  House  should  not  now  hang  their 
heads  with  shame  that  this  Congress  has  to  go  home,  after  more  than  six 
months'  session,  and  no  comprehensive  financial  or  revenue  measure  per- 
fected and  passed,  or  any  ever  come  from  that  committee  on  which  the 
House  may  pass;  but,  on  the  contrary,  they  have  been  engaged  in  vilify- 
ing the  administration,  rapping  "  old  Cock-eye,"  and  getting  even  with 
him,  even  to  examining  into  his  private  affairs,  the  fees  he  received  from 
private   persons,    and   his  personal   acts  to   the   number   of  thirty-three 


AN  EXTRAORDINARY  filSTORY.  221 

questions.  And  thus  having  learned  how  unjust  and  improper  it  is  for 
anybody  even,  anywhere,  to  examine  into  another's  private  affairs,  the 
committee  reported  a  bill  that  a  man's  books  and  papers  ought  not  to  be 
used  or  his  private  affairs  inquired  into  without  an  order  of  a  court  upon  a 
complaint  under  oath. 

Is  it  wonderful  tiiatthe  interests  of  the  republican  party  and  the  interests 
of  the  country  have  been  neglected  while  the  Committee  on  Ways  and 
Means,  under  the  leadership  of  the  gentleman  from  Kentucky,  endeavors 
to  break  down  the  administration,  as  he  had  a  right  to  do,  and  under  the 
lead  of  the  gentleman  from  Ohio,  mistakenly  thinking  he  had  a  private 
grief  against  me  to  assuage,  have  frittered  the  time  of  Congress  a\vay 
for  more  than  six  raontlis  in  striking  at  one  of  their  fellow  members 
who  had  not  injured  them,  and  against  whom,  although  pursued  with 
the  hate  of  hell,  they  found  nothing  and  reported  nothing  after  six  months 
of  investigation.    No,  thank  God;  as  usual,  "old  Cock-eye  "escaped  without 

a  rap. 

Now  1  call  upon  the  gentleman  from  Ohio  to  deny,  if  he  can,  that 
more  than  one  of  my  colleagues  have  been  to  him  to  give  him  informa- 
tion about  me,  and  to  have  questions  put  about  me,  and  to  advise 
with  him  as  to  the  curse  that  might  be  taken  in  his  Committee  to  in- 
vestigate me.  Sir,  was  that  so  or  not  ?  Will  the  gentleman  answer  upon 
his  honor? 

Mr.  Foster. — Do  you  wish  an  answer  now  ? 

Mr.  Butler,  of  Massachusetts. — Yes,  sir. 

Mr.  Foster. — I  have  to  say  that  I  have  had  no  conversation  with  any 
gentleman  from  Massachu.setts  in  relation  to  the  Sanborn  investigation  ; 
none  of  them  have  aided  or  advised  me  in  any  way  in  ^e  prosecution  of 
this  investigation. 

Mr.  Butler,  of  Massachusetts. — I  am  glad  to  hear  of  it. 

Mr.  Foster. — Or  in  the  investigation  of  the  matter  at  all. 

Mr.  Butler,  of  Massachusetts. — Only  about  other  things  ? 

Mr.  Foster. — No;  about  nothing  else. 

Mr.  Butler,  of  Massachusetts. — Whenever  I  want  a  witness  to  tell  me 
what  is  not  true  I  shall  not  send  for  my  friend  from  Ohio. 

Mr.  Foster. — What  do  you  mean  by  that  ? 

Mr.  Butler,  of  Massachusetts. — I  mean  that  you  tell  the  truth  exactly. 

Does  the  House  wonder  now  that  almost  the  only  man  who  was  found 
to  object  to  my  addressing  the  House  at  this  hour  was  one  of  my  colleagues 
from  Massachusetts  ? 

Mr.  Speaker,  this  business  of  investigation  is  carried  too  far.  I  can  speak 
plainly  in  the  face  of  the  country;  for  myself  I  defy  investigation.     For 


222  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

fourteen  years,  since  tlie  commencement  of  my  public  life,  I  have  lived 
under  the  focus  of  a  microscope,  magnifying  and  distorting  every  action 
of  mine  a  million  times,  except,  perchance,  it  was  a  good  one,  which  it 
blurred  and  covered  altogether.  Living  under  such  inspection,  therefore, 
whether  I  would  or  no,  I  must  lead  an  honest  and  upright  life,  or  some 
man  would  in  all  these  years  have  got  a  "rap  at  old  Cock-eye,"  and  I  pro- 
pose to  take  very  good  care  of  him  now  and  ever.  1  desire  investigation. 
I  look  forward  to  the  time  when  the  majority  of  this  House  will  be  opposed 
in  politics  to  mine,  and  tlum  I  ask  them  to  investigate  every  act  of  mine 
and  publish  its  results  to  the  country.  1  invoke  the  investigation  of  a  gen- 
tlemanly political  opposition,  and  not  of  a  malignant  personal  spleen  and 
spite,  egged  on  by  political  rivalry;  because  I  humbly  trust  that  when  my 
every  act  is  known  and  understood  authoritatively,  and  exactly  in  its 
breadth  and  in  its  motives,  the  kindly  judgment  of  my  countrymen  will  be, 
after  all  rivalry  and  unkindness  of  thought  has  passed  away,  "  He  was  a 
man  whose  virtues  overbalanced  his  faults,  who  loved  his  country,  his  kind, 
justice  and  nobleness." 

Mr.  Foster. — Let  us  pray. 

Mr.  Butler,  of  Massachusetts. — Yes,  but  spell  it  with  an  "  e." 

SPEECH  OF  HOxN.  ELLIS  H.  ROBERTS. 

Mr.  Ellis  H.  Koberts  then  took  the  floor  and  spoke  as  follows: 
Mr.  Speaker,  after  laws  are  passed  it  is  not  usual  to  discuss  them.  It 
has  remained  for  the  gentleman  from  Massachusetts  (Mr.  Butler)  to  wait 
until  both  Houses  of  Congress  have  acted  upon  the  bill  which  he  assails  to 
come  in  and  make  his  argument  against  it.  It  is  not  because  he  was  not 
invited  that  he  did  not  appear  upon  the  discussion  of  the  moiety  bill;  it 
was  not  because  he  did  not  have  the  opportunity  to  appear  that  he  did  not 
discuss  the  Sanborn  contracts,  when  the  bill  in  relation  to  those  contracts 
was  pending  in  the  House.  It  fell  to  me  to  have  charge  of  the  bill  to 
amend  the  customs  laws  and  to  repeal  moieties,  and  three  times,  Mr. 
Speaker,  as  you  personally  know,  the  consideration  of  that  bill  was  post- 
poned to  enable  the  gentleman  from  Massachusetts  to  appear  and  be  heard 
upon  it.  He  states  that  it  was  understood  by  the  country  that  he  was  ill 
when  the  bill  was  passed.  The  anteroom  at  my  back  resounded  with  the 
stories  that  he  was  telling  and  the  arguments  that  he  was  making  there 
against  the  bill;  not  here  before  Congress,  not  here  before  the  country,  but 
back  there  in  the  cloak  room  he  choose  to  come  and  make  his  arguments. 
Sir,  I  do  not  object  to  his  arguments  now  or  at  any  time,  here  or  else- 
where. 


AN  EXTRAORDINARY  HISTORY.  223 

He  chose  to  refer  to  the  British  revenue  system.  He  tells  you  that  we 
referred  in  our  discussion  to  the  British  revenue  system  as  justifying  the 
bill  which  Congress  passed  with  entire  unanimity  in  this  House,  and  with 
but  three  dissenting  votes  in  the  other  House,  and  upon  the  conference 
report  without  one  dissenting  voice  in  either  House. 

But  the  British  system,  Mr.  Speaker,  is  not  our  only  authority,  and  yet 
we  might  rely  upon  it.  The  gentleman  chose  to  say  that  our  tariff  was 
complex.  It  is;  but  our  internal  revenue  system  is  complex  now,  and 
was  much  more  complex  when  Congress,  with  great  unanimity,  repealed 
the  moiety  system  with  reference  to  the  internal  revenue.  Our  internal 
revenue  system  justifies  the  Act  of  Congress  as  British  experience  justifies 
the  policy  which  we  have  adopted, 

Bui  the  gentleman  from  Massachusetts  tells  you  that  the  moiety  system 
has  been  sustained  by  every  administration  since  the  foundation  of  the 
Government.  It  is  true  that  it  is  an  old  sy.-tem.  In  olden  times  it  was 
customary  to  hang  a  man  who  stole  a  sheep.  It  was  not  found  by  experi- 
ence that  that  was  a  wise  provision  of  law,  nor  has  it  been  found  wise  to 
maintain  a  like  barbarism  upon  our  statute  books  in  any  regard. 

But  tiie  gentleman  from  Massachusetts  comes  here  to  teach  us  that  we 
should  have  a  specific  and  not  an  ad  valorem  tariff.  Perhaps  that  is  so. 
But  that  is  not  the  question  before  us  to-night;  and  it  was  not  the  question 
pending  before  this  House  when  the  bills  were  passed  which  he  now  assails. 
The  gentleman  tells  us  that  under  this  ad  valorem  system  we  collect  but  67 
per  cent,  of  the  duties,  not  without  the  moieties  but  with  the  moieties,  not 
without  this  machinery  of  barbarism  but  with  this  machinery  of  barbarism. 
With  your  inducements  to  oflBcers  to  suffer  violations  of  the  law  to  go  on 
for  years,  to  mass  large  penalties  for  division;  with  your  arbitrary  invasion 
of  the  office  and  correspondence;  with  your  severities  arraying  public  sen- 
timent against  you,  so  that  juries  refuse  to  be  the  instruments  of  your  laws  j 
with  commerce  protesting  against  your  statutes  and  their  enforcement,  it  is 
not  strange  that  we  can  collect  but  67  per  cent,  of  our  duties. 

If  we  cannot  do  any  better  than  that  with  this  system  of  barbarism,  I 
ask  my  colleagues  about  me  if  it  is  not  high  time  to  try  some  better  system  ? 
We  mean  to  collect  more  than  67  per  cent.  That  is  why  we  have  asked 
Congress  to  reform  the  revenue  laws;  that  is  why  you  have  abolished 
moieties — why  you  have  adjusted  the  use  of  books  and  papers  as  evidence 
to  the  rule  of  every  one  of  our  States  and  to  the  practice  of  our  fathers; 
that  is  why  you  strike  down  the  extreme  measures  adopted  during  the  war; 
that  is  why  you  appeal  to  the  mercantile  community  to  assist  in  sustaining 
just  laws.  You  have  made  no  mistake  in  so  doing.  And  even  the  gen- 
tleman from  Massachusetts  did  not  appear  to  obstruct  your  beneficent 
action. 


224  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

But  he  does  como  here  to  tell  us  something  about  the  case  of  Phelps, 
Dodge  &  Co.  Mr.  Speaker,  we  are  not  trying  the  case  of  Phelps,  Dodge  & 
Co.  If  we  were,  then  the  remarkable  qualities  of  the  gentleman  from  Mas- 
sachusetts as  a  criminal  lawyer  might  well  be  brought  into  play,  and  coun- 
sel ought  also  to  be  present  on  the  other  side.  We  are  here  to  consider  legis- 
lation, not  to  assailcitizens  who  are  reputable — who  were  reputable  before 
the  gentleman  from  Massachusetts  came  into  the  Congress  of  the  United 
States,  and  who  will  be  reputable  after  the  gentleman  from  Massachusetts 
leaves  this  body. 

.\lr.  Butler,  of  Massachusetts. — To  what  citizens  do  you  refer  ? 

Mr.  Ellis  H.  Roberts. — 1  refer  to  the  house  of  Phelps,  Dodge  &  Co. 

iMr,  Butler,  of  Massachusetts. — 0,  yes;  that  is  all  right. 

Mr.  Ellis  H.  Roberts. — And  I  refer  to  the  gentleman  from  Massachusetts. 

Mr.  Butler,  of  Massachusetts. — I  heard  that. 

Mr.  Ellis  H.  Roberts. — And  I  ask,  because  I  do  not  know  so  much  as 
the  gentleman  from  Massachusetts  about  the  case  of  Phelps,  Dodge  &  Co. 

Mr.  Butler,  of  Massachusetts. — That  is  evident. 

Mr.  Ellis  H.  Roberts. — I  do  not  know  so  much  as  the  gentleman  from 
Massachusetts  of  one  side  of  that  case.  To  show  why  he  is  better  informed 
about  it  than  I  can  be,  I  ask  that  the  evidence  of  the  informer  with  refer- 
ence to  the  connection  of  the  gentleman  from  Massachusetts  with  the  case 
of  Phelps,  Dodge  &  Co.  may  be  read. 

Mr.  BuTLBR,  of  Massachusetts. — I  am  much  obliged  to  you  for  that. 

Mr.  Ellis  H.  Roberts. — It  will  be  found  on  page  173  of  the  evidence, 

Mr.  Butler,  of  Massachusetts. — Will  you  allow  me  to  reply  after  it  is  read? 

Mr.  Ellis  H.  Roberts. — No,  sir. 

Mr.  Butler,  of  Massachusetts. — I  thought  so. 

Mr.  Ellis  H.  Roberts. — You  declined  to  let  me  come  in. 

Mr.  Butler,  of  Massachusetts. — Never. 

Mr.  Ellis  H.  Roberts. — You  have  had  your  day  in  court. 

Mr.  Butler,  of  Massachusetts. — I  only  declined  to  have  you  interrupt  me, 
not  to  have  you  come  in  and  reply. 

The  Clerk  read  as  follows: 

Mr.  Foster. — I  did  not  exactly  understand  the  answer  to  Mr.  Roberts'  question.  You  em- 
ployed counsel  for  what? 

Mr.  Jayne. — I  deemed  that  it  was  a  case  where  some  ugly  poinis  might  arise,  and  where 
this  matter  might  come  up ;  that  it  probably  would  come  up  in  the  course  of  some  discussion 
growing  out  of  this  case.  I  did  consent  and  urge  settlement  of  this  case  for  a  sum  of  money 
that  the  counsel  for  the  informer  was  not  willing  should  be  accepted.  I  deemed  that  some 
ugly  proceedings  might,  perhaps,  grow  out  of  this  attempt  to  black  mail.  I  thought  the 
truth  might  come  out  and  I  might  need  counsel  I  came  with  the  facts  to  the  Secretary  of 
the  Treasury  and  to  counsel  whom  I  employed. 


AN  EXTRAORDINARY  HISTORY.  225 

Mr.  Foster. — Then  I  am  to  understand  that  you  employed  counsel  to  prevent  a  larger  sum 
being  paid  by  Phelps,  Dodge  &  Co.? 

Mr.  Jayne. — I  employed  counsel  to  secure  the  settlement  upon  the  terms  that  they  offered 
and  seemed  anxious  to  close  upon. 

Mr.  Foster. — And  not  to  have  them  pay  a  larger  sum  ? 

Mr.  Jayxe. — Not  to  have  them  pay  a  larger  sum. 

Mr.  Foster  — I  think  it  would  be  well  for  you  to  give  the  name  of  the  counsel,  for  we 
have  understood  that  he  was  employed  for  a  different  purpose. 

Mr.  Jayne. — General  Butler  was  the  gentleman,  sir.  He  was  not  employed  for  a  different 
purpose. 

Mr.  Foster. — Has  he  been  employed  in  any  other  cases  with  you  ? 

Mr.  Jayne. — Whenever  I  had  questions  of  law  that  I  did  not  understand — and  in  the 
course  of  my  experience  I  have  had  a  great  many  questions  of  law  and  of  evidence  arising — 
I  have  submitted  a  number  of  questions  to  General  Butler,  and  I  have  paid  him,  I  think, 
$1,500  besides  what  I  paid  in  that  case. 

Mr.  Foster. — How  many  cases  has  he  been  employed  in  ? 

Mr.  Jayne. — I  could  not  tell  the  exact  number  that  I  have  asked  him  questions  with  regard 
to.    I  should  think  two  or  three,  or  three  or  four,  perhaps. 

Mr.  Ellis  H.  Roberts. — That  is  all  I  ask  to  have  read  at  this  time.  That 
will  show  why  the  gentleman  from  Massachusetts  knows  more  about  that 
case,  or  may  claim  to  know  more  about  one  side  of  it  than  I  do.  Perhaps  it 
is  a  part  of  the  task  which  he  has  undertaken,  for  the  fee  mentioned  in 
that  evidence,  to  assail  a  reputable  mercantile  house  upon  the  floor  of  the 
American  Congress. 

Mr.  Butler,  of  Massachusetts. — Will  the  gentleman  allow  me 

Mr.  Ellis  II.  Roberts — The  floor  is  mine,  Mr.  Speaker. 

Mr.  Butler,  of  Massachusetts. — You  are  as  brave  as  a  country  editor  gen- 
erally is. 

Mr.  Ellis  H.  Roberts. — Brave  I  I  have  asked  you  three  times  to  come 
into  this  House  and  debate  this  question,  and  you  had  not  the  courage 
to  come. 

Mr.  Butler,  of  Massachusetts. — Not  when  I  was  sick. 

Mr  Ellis  H.  Roberts. — The  floor  is  mine,  Mr.  Speaker. 

Mr.  Butler,  of  Massachusetts — You  asked  a  sick  man  to  come;  you  are 
very  brave.     He  is  well  now,  and  you  will  not  hear  him. 

Mr.  Ellis  H.  Roberts: 

"I  did  hear  him  groan: 
Ay,  and  that  tongue  of  his,        *  * 

*  *  *  ♦  * 

Alas !  it  cried,  '  Give  me  some  drink,  Titinius,' 
As  a  sick  girl." 

Mr.  Butler,  of  Massachusetts. — Yes,  I  am  like  Csesar. 
Mr.  Ellis  H.  Roberts. — Yes:  "As  a  sick  girl." 

15 


226  CONGRESS  AND  PHELPS,  DODGE  &  CO. 


SEIZURE    OF    BOOKS    AND    PAPERS. 

Let  me  call  particular  attention  to  the  very  significant  fact  that  even  the 
gentleman  from  Massachusetts  has  not  one  word  to  soy  in  favor  of  the  sys- 
tem of  the  seizure  of  books  and  papers.  You  have  substantially  wiped  it 
out.  That  is  one  of  the  chief  features  of  the  bill  which  you  have  passed. 
Against  that  reform  criticism  is  dumb. 

The  gentleman  from  Massachusetts  contents  himself  with  warning  us 
against  the  consequences  of  the  repeal  of  moieties.  When  was  it  ever  dis- 
covered that  exactly  one  half  was  the  proper  sum  with  which  to  induce 
lawyers  and  others  to  steal  papers,  or  to  have  them  *' picked  up  on  the 
street,"  to  bribe  clerks  of  merchant  houses,  and  to  surround  the  commerce 
of  this  country  with  an  infamous  band  ?  Why  is  it  just  one  half?  Why 
not  a  little  more  than  one  half,  so  that  larger  fees  could  be  paid  for  counsel 
to  appear  not  only  at  the  Treasury  but  upon  the  floor  of  this  House  ?  Why 
not  more  than  one  half?     Why  not  a  little  less  ? 

You,  my  colleagues,  have  chosen  to  say  that  for  smuggling  you  will  pay 
one  half  for  the  detection  of  the  crime;  but  for  other  offences  against  the 
revenue  you  will  pay — how  much  ?  A  bagatelle,  is  it?  For  the  detection 
of  any  offence  against  the  revenue  committed  by  importers  or  by  officers  of 
the  revenue  you  will  pay  as  much  as  you  pay  for  a  year's  work,  not  simply 
to  the  Chairman  of  the  Committee  on  Ways  and  Means,  with  his  experience 
of  eighteen  years  in  this  House,  his  ability,  and  industry  and  fidelity;  but 
you  will  pay  for  the  detection  of  every  crime  against  the  revenue,  as  much 
even  as  the  American  people  pay  to  their  Chairman  of  the  Committee  on  the 
Judiciary  of  this  House.  Is  not  that  quite  enough — a  year's  salary  of  the 
best  talent  in  the  country  employed  in  the  cares  and  responsibility  of  legis- 
lation for  any  detective  who  will  bring  to  light  one  single  offence  against 
the  revenue  ?  The  price  of  a  farm,  of  a  homestead,  to  a  detective  for  a  sin- 
gle case — is  not  that  enough  ?  Do  you  want  to  keep  up  a  system  for  pour- 
ing money  into  States  to  control  gubernatorial  nominations  ?  Even  with 
all  that  flood  of  money  gubernatorial  nominations  are  not  always  secured. 

But  the  gentleman  from  Massachusetts  appeals  to  the  country  against 
Congress  as  if  we  had  repealed  fines,  penalties  and  forfeitures.  The  gen- 
tleman from  Massachusetts  could  not  have  intended  to  create  that  impres- 
sion, because  it  is  not  true.  You  have  not  repealed  fines,  penalties  and 
forfeitures.  We  have  sought  to  make  them  more  definite;  we  have  sought 
to  make  collection  dependent,  not  upon  informers,  not  even  upon  the 
pleasure  of  the  Secretary  of  the  Treasury,  or  any  district  attorney.  But  we 
have  sought  to  make  your  law  clear,  and  to  render  its  execution  certain  as 
the  fiat  of  fate. 


AN  EXTRAORDINARY  HISTORY.  227 

But,  Mr.  Speaker,  it  is  a  work  of  supererogation  to  talk  here  in  favor  of  a 
bill  which  received  the  unanimous  vote  in  this  House  from  every  State; 
which  in  the  other  branch  of  Congress  had  but  three  negative  votes,  and 
finally,  upon  the  conference  report,  was  unanimously  adopted. 

Mr.  Dawes. — After  full  discussion. 

.Mr.  Ellis  H.  Roberts. — Yes.  After  long  and  full  discussion  in  the  other 
House,  and  after  a  discussion  in  this  House  which  was  exhaustive  in  every 
respect  except  in  not  having  represented  in  it  the  honorable  gentleman 
from  Massachusetts. 

Mr.  Speaker,  I  have  it  in  my  heart  and  bones  that  the  republican  party 
is  the  party  of  conscience,  the  party  of  progress,  and  the  party  of  right, 
and  it  is  because  I  so  believe  that  I  have  been  a  republican  before  the  gen- 
tleman from  Massachusetts  was  a  republican,  and  I  expect  to  be  a  repub- 
lican after  the  gentleman  from  the  Essex  district  of  Massachusetts  has  made 
new  party  aflQliations  and  gone  to  his  own  place. 

It  is  because  the  moiety  bill  adjusts  the  revenue  law  to  what  I  believe  to 
be  the  modern  ideas  of  humanity  not  only,  but  what  seems  to  me  to  be  the 
essential  spirit  of  civilization,  that  in  my  humble  way  I  have  done  what  in 
me  lay  for  the  repeal  of  the  system,  and  in  doing  that  I  have  rendered  the 
best  service  in  my  power  to  the  republican  administration,  to  the  republican 
party,  to  honesty  in  legislation  and  administration,  and  therefore  to  my 
country  and  my  God. 

SPEECH  OF  HON.  CHAS.  FOSTER,  OF  OHIO. 

Mr.  Foster,  who  followed  Mr.  Roberts,  said: 

Mr.  Speaker,  after  listening  to  the  extraordinary  speech  just  made  by 
the  gentleman  from  Massachusetts  (Mr.  Butler),  I  find  but  little  in  it  that 
calls  upon  me  for  a  reply,  save  and  except  his  personal  allusions  to  me  in 
connection  with  the  Sanborn  investigation,  and  I  desire  to  sa}'  that  so  far 
as  my  personal  action  in  these  proceedings  is  concerned,  it  was  solely  in 
the  line  of  discharging  an  official  duty,  and  with  no  feeling  of  unkindness 
toward  any  one.  I  believed  from  the  start  that  a  monstrous  robbery  had 
been  attempted  and  partly  executed  on  the  Treasury.  I  believed  then,  as 
I  do  now,  that  the  law  authorizing  the  Sanborn  contracts  was  passed  for 
plunder  by  those  who  engineered  its  passage.  I  believed  that  more  tha^^ijv 
one  member  of  Congress  had  knowledge  of  the  purposes  for  which  it  was 
be  used  before  it  passed.  If,  therefore,  in  asking  general  questions  about 
members  of  Congress  in  connection  with  these  contracts,  the  answers  to 
which  should  point  in  all  manner  of  ways  to  the  gentleman  from  Massachu- 
setts (Mr.  Butler),  it  is  not  my  lault.     If  he  has  had  no  connection  with 


228  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

them,  it  is  certainly  unfortunate  for  him  that  so  many  of  his  friends  should 
be  mixed  up  with  them. 

I  well  knew  that  I  would  have  to  encounter  such  hostility  as  only  the 
gentleman  from  Massachusetts  can  command.  I  knew  that  my  letters,  if 
possible,  would  be  stolen;  I  knew  that  unprincipled  men  would  be  induced 
to  make  false  affidavits;  I  knew  that  my  past  life  would  be  investigated 
with  the  purpose  to  "  break  me  down ;"  but  I  did  not  expect  that  the  secret 
service  of  the  Government  would  be  used  to  traverse  my  district  trying  to 
hunt  up  something  for  the  gentleman  to  use  against  me.  He  has  through 
the  agency  of  one  Hughes  secured  a  copy  of  a  letter  of  mine,  which  he  has 
just  read  to  the  House,  the  contents  of  which  he  is  welcome  to.  Let  him 
make  the  best  use  he  may  of  the  phrase  "old  Cock-eye;"  it  is  a  generous, 
well  intended  phrase,  will  wear  well,  and  live  as  long  as  the  gentleman 
from  Massachusetts.  He  has  come  forward  with  an  affidavit  from  a  black 
mailer  of  Sanborn,  known  to  him  as  such,  in  which  the  false  statement  is 
made  that  I  said  to  this  man  Martin,  ''  D — n  Butler;  he  ought  to  be  investi- 
gated." He  has  acknowledged  that  he  has  sent  into  my  district  to  learn  of 
something  that  he  might  use  against  me.  His  strikers  have  given  out 
that  I  was  to  be  scalped.  Now,  what  does  all  this  amount  to?  There  is 
nothing  in  the  letter  of  which  any  friend  of  mine  need  take  exception,  ex- 
cept to  smile  at  its  truthfulness.  There  is  nothing  in  the  affidavit 
(if  true)  that  reflects  any  discredit  on  me;  and  so  little  could  his  detec- 
tives find  in  my  district,  that  he  has  not  been  able  to  come  forward  with 
any  charge  whatever. 

On  the  other  hand,  Mr.  Speaker,  the  investigation  has  been  a  complete 
success,  a  vindication  of  my  labors  on  the  sub  committee,  and  of  the  work 
of  the  whole  committee  in  the  results  they  have  reached;  for  the  House 
have  unanimously  adopted  the  bills  and  reports.  The  law  under  which  the 
Sanborn  contracts  were  made  is  repealed,  the  contracts  annulled,  the  offi- 
cers of  the  Treasury  Department  directly  and  indirectly  connected  with 
this  disgraceful  transaction  are  removed,  and  are  replaced  by  men  in  whom 
the  country  has  the  fullest  confidence. 

That  I  have  led  in  an  investigation  that  has  resulted  so  successfully  in 
every  phase  of  the  case  is  a  matter  in  which  I  feel  a  just  pride,  and  is  one 
which  I  know  the  country  appreciates.  That  the  gentleman  from  Massa- 
chusetts has  suflfered  in  reputation  is  not  my  fault,  but  rather  that  of  his 
associations.  I  am  not  surprised  that  he  should  feel  so  sore  over  it  and 
that  he  has  seen  fit  to  make  a  personal  attack  upon  me  to-night.  He  has 
made  his  own  bed  of  torture;  let  him  lie  in  it.     I  cannot  help  it. 

I  am  very  glad,  Mr.  Speaker,  of  the  opportunity  of  presenting  to  the 
House  and  to  the  country  the  facts  in  relation  to  that  investigation.     The 


AN  EXTRAORDINARY  HISTORY.  229 

gentleman  from  Kentucky  (Mr.  Beck)  and  myself  were  appointed  a  sul) 
committee  on  the  part  of  the  Committee  on  Ways  and  Means  to  investigate 
the  affairs  of  the  Internal  Revenue  Office,  at  the  request  of  the  Committee  on 
Appropriations.  During  that  investigation  it  came  to  our  knowledge  that 
the  Treasury  of  the  United  States  was  being  robbed  in  some  way,  just  ex- 
actly how  we  did  not  know.  I  went  alone  to  the  officers  of  the  Treasury 
Department,  because  the  gentleman  from  Kentucky  (Mr.  Beck)  said  to  nie 
that  I  had  better  go  myself — that  as  he  was  a  democrat  it  would  be  better 
for  me  to  know  the  secrets  of  these  things  alone.  I  went  to  the  office  of 
the  Solicitor  of  the  Treasury,  and  also  to  the  office  of  the  Secretary 
of  the  Treasury,  and  my  interview  with  those  officers  was  so  unsatis- 
factory that  I  came  back  to  the  House  and  offered  a  resolution  of 
inquiry  calling  for  copies  of  the  contracts.  After  two  or  three  weeks' 
delay  that  resolution  was  answered,  giving  copies  of  the  contracts,  but 
without  the  names  of  parties  charged  with  having  withheld  their  taxes. 
That  answer  was  unsatisfactory  to  the  House,  and  the  gentleman  from 
Pennsylvania  (Mr.  Randall)  offered  a  resolution  broader  in  its  terms,  which 
was  referred  to  the  Committee  on  Ways  and  Means.  The  Committee  on 
Ways  and  Means  directed  me  to  report  back  to  the  House  that  resolutit)n 
in  still  broader  terms,  calling  for  copies  of  the  contracts  and  orders  and 
everything  in  relation  to  the  Sanborn  contracts.  In  the  course  of  time,  in 
two  or  three  weeks,  perhaps,  we  got  an  answer  to  to  this  resolution.  TIfen 
in  two  or  three  weeks  the  Secretary's  answer  came  to  the  House  and  was 
ordered  to  be  printed,  and  when  printed  the  document  came  to  the  Com- 
mittee on  Ways  and  Means,  and  on  examination  the  Committee  directed 
me  to  report  a  bill  to  the  House  to  repeal  the  law. 

Now,  Mr.  Speaker,  but  for  the  written  request  of  Sanborn  asking  to  be 
heard  before  we  acted,  and  the  personal  application  of  the  gentleman  from 
Massachusetts  (Mr.  Butler)  that  Sanborn's  request  be  granted,  that  law 
would  have  been  repealed  and  no  investigation  would  have  been  instituted 
About  that  time  Mr.  Sumner  died,  and  this  mattei  was  postponed  until  the 
ceremonies  attending  his  funeral  were  over.  Sanborn  appeared  directly 
afterward  with  a  host  of  witnesses,  half  a  dozen  or  more.  He  brought  Mr. 
Coughlin  from  New  York,  he  brought  Mr.  Simmons  from  Boston,  he  brought 
old  Belsterling  from  Philadelphia,  and  others — some  from  Washington  and 
other  points.  They  came  on  here,  and  were  going  to  convince  (as  the 
gentleman  from  Massachusetts  said)  the  Committee  on  Ways  and  Means 
that  we  were  all  wrong,  and  that  the  law  ought  not  to  be  repealed;  but 
by  the  time  we  got  through  with  them  we  found  the  whole  transaction 
reeking  and  stinking  with  corruption  all  over — so  much  so  indeed,  that 
Sanborn  himself,  at  the  instigation  I  presume  of  the  gentleman  from  Mas- 
sachusetts (Mr.  Butler),  refused  to  testify. 


230  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

^fr.  BuTLF.R,  of  Mas?achuRettf;, — Why  do  you  prepume  that? 

^fr.  Foster. — Bocause  lie  said  he  liad  a  letter  from  a  member  of  Congress 
asking  him  not  to  testify. 

Mr.  Butler,  of  Massachusetts. — From  me  he  did  not. 

Mr.  Foster. — He  said  that  he  had  got  a  letter  fron)  a  member  of  Congress 
advising  him  not  to  testify. 

Afr  Butler,  of  Massachusetts. — His  counsel  ? 

Afr.  Foster. — There  is  nothing  but  coat-tails  about  that. 

Mr.  Butler,  of  Massachusetts. — Did  you  not  say  in  your  letter  that  you 
were  going  to  give  "  a  rap  at  old  Cock-eye  ?  " 

Mr.  Foster.— Yes,  I  did;  and  I  wish  to  ask  the  gentleman  from  Afassa- 
chusetts  if  I  did  not  get  in  "  a  rap  at  old  Cock-eye"  on  a  former  occasion 
and  after  tlie  letter  was  written,  say  about  the  10th  of  March  ? 

Mr.  Butler,  of  Massachusetts. — No;  not  once;  not  even  his  coat  tails. 
You  have  just  said  you  never  got  nearer  than  his  coat-tails. 

Mr.  Foster. — The  gentleman  was  fairly  knocked  down  one  day  here.  But 
no  more  about  that,  however;  let  me  go  on  with  my  story. 

Mr.  Butler,  of  Massachusetts. — 0,  yes. 

Mr.  Foster. — Sanborn  himself  refused  to  testify.  The  Committee  on 
Ways  and  Means  found  out  by  those  witnesses  brought  here  by  Sanborn 
himself,  without  any  expense  to  the  Government,  that  he  was  robbing  the 
Treasury  as  well  as  debauching  certain  internal  revenue  officers  from  New 
York  and  New  England;  that  they  were  simply  collecting  money  that  the 
officers  of  the  Government  could  collect  themselves  without  any  interven- 
tion of  Mr.  Sanborn.  We  discovered,  and  you  will  find  it  in  this  report, 
that  he  collected  several  thousand  dollars  from  one  of  these  railroads  six 
months  before  he  had  a  contract  to  collect  at  all;  that  he  collected  several 
thousand  dollars,  some  ten  or  twelve  thousand  dollars,  without  any  con- 
tract whatever,  and  many  other  transactions  equally  scandalous. 

Mr.  Speaker,  we  followed  this  matter  up,  and  T  never  asked  a  question 
which  led  to  a  sight  of  the  gentlemen's  coat-tails,  as  you  will  see  if  you 
will  look  through  that  book  of  testimony,  but  what  was  general  in  its  char- 
acter. I  never  asked  a  question  directly  about  the  gentleman  from  Massa- 
<3husetts  (Mr.  Butler);  I  asked  about  some  member  of  Congress.  We  found 
Prescott,  No.  12  Pemberton  Square.  I  do  not  suppose  the  gentleman  knows 
him,  but  he  has  an  office  in  the  same  building.  I  do  not  suppose  the  gentle- 
man from  Massachusetts  knew  anything  about  Prescott  offering  $5,000  to  one 
of  the  Brooklyn  papers  to  take  Sanborn^s  side  of  this  question.  I  do  not  sup- 
pose  he  knew  anything  about  paying  money  to  the  man  Hughes,  loho  stole  my 
letter  to  aid  in  securing  Sanborn\s  acquittal  in  the  United  States  Court  at  Brook- 
lyn.    I  do  not  suppose  he  knows  anything  about  these  people,  as  well  as  almost 


AN  EXTRAORDINARY  HISTORY.  231 

every  other  man  engaged  in  this  infamous  transaction.  Rut  the  facts  are 
that  in  one  way  or  another  they  all  had  some  sort  of  a  connection  with 
him.  My  letter  was  stolen,  not  picked  up  in  the  street  as  the  gentleman  says, 
and  given  to  the  gentleman  from  Massachu>ietts.  \  expected  my  letters 
would  be  stolen  when  I  got  into  this  controversy  with  the  gentleman,  and 
I  was  careful  about  what  I  wrote.  There  is  nothing  in  any  letter  I  have 
written  which  calls  for  explanation.  And  further,  Mr.  Speaker,  this  House, 
for  the  protection  of  its  members,  had  to  pass  a  resolution  to  keep  the 
gentleman  from  Massachusetts  from  stealing  telegrams. 

Now,  Mr.  Speaker,  I  have  but  little  more  to  say  about  this  matter.  This 
investigation  was  brought  on  by  the  friends  of,  and  by  the  gentleman  from 
Afassachusetts  himself.  No  other  person  was  to  blame.  They  brought  it 
on,  and  out  of  the  mouths  of  their  own  witnesses  this  testimony  came. 
We  forced  it,  it  is  true.  We  forced  Mr.  Sanborn  to  testify.  We  discovered 
these  frauds  which  are  fully  set  forth  in  our  report,  and  which  have  not 
been,  and  cannot  be  answered  by  the  gentleman  from  Massachusetts  to- 
niglit.  The  bill  rei)ealing  the  law  was  passed  by  a  unanimous  vutc  of  this 
House,  the  gentleman  himself  being  present. 

Mr.  NiBL.\CK — 1  desire  to  call  the  attention  of  the  gentleman  from  (Jiiio, 
before  he  concludes,  to  the  manner  in  which  Mr.  Sanborn  procured  infor- 
mation from  Europe  in  regard  to  income  taxes  and  other  claims  for  taxes. 

Mr.  Foster — What  is  the  gentleman's  point? 

Mr.  NiBi.ACK. — I  desire  to  call  the  attention  of  the  gentleman  from  Ohio 
to  the  manner  in  which  Mr.  Sanborn  procured  information  from  Europe  as 
to  certain  taxes  that  the  gentleman  from  Massachusetts  (Mr.  Butler; 
claimed  that  Mr.  Sanborn  had  information  of,  vvhich  he  proposed  to  collect 
if  allowed  to  do  so.  I  desire  also  to  call  his  attention  to  the  manner  in 
which  Mr.  Sanborn  got  information  as  to  certain  whiskey  taxes,  also  as  to 
certain  railroads. 

Afr.  Foster. — We  have  gone  over  all  these  things,  ^[r.  Speaker,  in  our 
report  and  in  our  speeches.  But  it  may  be  well  on  this  occasion  to  call  the 
attention  of  the  House  and  the  country  to  them  again. 

Now,  this  railroad  case  was  a  marvellous  thing.  Sanborn  made  marvel- 
lous use  of  railroad  guides;  that  oath  of  his  is  complimented  by  the  gentle- 
man to-night.  The  acquaintance  of  Mr.  Sanborn  with  the  gentleman  from 
Massachusetts  is  long  lived.  It  dates  away  back  to  old  Portress  Monroe 
times.  This  man  Sanborn  was  engaged  in  business  with  Mr.  Hildreth  (I 
do  not  care  to  tell  here  the  relationship  between  Hildreth  and  the  gentle 
man)  down  in  the  neighborhood  of  Fortress  Monroe,  selling  goods  to  the 
rebels.  Hildreth  and  Sanborn  made  a  good  deal  of  money  at  that  time. 
I  am  told  that  Sanborn  was  employed  as  agent  of  the  Adams  Express  Com- 


232  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

pany  South  and  played  rebel.  The  company  wanted  a  go-between  who 
would  get  through  the  command  at  Fortress  Monroe,  where  the  gentleman 
from  Massachusetts  then  commanded,  and  Mr.  Sanborn  was  employed. 
What  we  were  told  as  to  that  is  not  published,  and  I  will  not  further 
allude  to  it. 

I  do  not  think  it  worth  while,  Mr.  Speaker,  to  detain  the  House  at  any 
greater  length  on  the  matter  of  the  Sanborn  contracts,  and  I  would  not 
have  said  a  word  on  this  subject  but  for  the  personal  attack  the  gentleman 
from  Massachusetts  has  made  upon  me. 

Mr.  Butler,  of  Massachusetts. — I  have  made  no  attack  upon  you. 

Mr.  Foster. — I  do  know  from  reputable  sources  that  men  have  been  in 
my  district — under  whose  auspices  I  do  not  know — looking  into  the  mat- 
ter of  my  election  and  trying  to  find  out  something  about  me,  for  what 
purpose  I  am  not  advised.  But  1  am  advised,  and  I  will  state  it  to  the 
House,  though  the  authority  may  not  be  very  good,  that  the  secret  service 
fund  has  been  used  to  send  men  to  my  district — I  mean  the  secret  service 
in  charge  of  Colonel  Whiteley,  another  one  of  the  gentleman's  friends — to 
look  for  a  fifty  cent  counterfeit  plate.  That  was  the  ostensible  purpose  of 
his  visit  to  my  district.  The  real  purpose  was  to  hunt  up  something  for 
the  gentleman  from  Massachusetts  (Mr.  Butler)  to  use  against  me. 

I  do  not  suppose  the  gentleman  from  Massachusetts  knows  anything  about 
it.  I  do  not  suppose  he  knows  about  anybody  being  sent  there.  Still  they  have 
been  there,  and  were  sent  by  his  friends.  But,  Mr.  Speaker,  it  seemed  to 
me,  under  this  provocation,  that  I  had  a  right  to  say  "old  Cockeye"  just 
once  in  a  letter  to  a  friend. 

Mr.  Butler,  of  Massachusetts. — That  is  your  stock  in  trade. 

Mr.  Foster. — It  is  a  good  stock,  is  it  not  ? 

Mr.  Butler,  of  Massachusetts. — It  is  all  you  have  got. 

Mr.  Foster. — I  do  not  know  that  I  shall  say  anything  further.  I  only 
rose  to  give  a  history  of  the  connection  of  the  Ways  and  Means  Committee 
with  the  Sanborn  case,  and  to  repel  the  gentleman's  attack.  But  I  do  want 
to  make  a  further  remark,  and  that  is  about  the  case  of  Phelps,  Dodge  & 
Co.  A  more  unprovoked,  unwarranted,  outrageous  assault  upon  reputable 
gentlemen  I  have  never  heard  of,  and  I  believe  was  never  heard  by  the 
House  or  the  country  before.  What  Phelps,  Dodge  &  Co.  may  have  done 
forty  years  ago  I  do  not  know.  I  am  assured  that  that  statuary  business 
occurred  before  either  of  the  gentlemen  now  composing  this  firm  were 
partners  in  the  house.  What  Phelps,  Dodge  &  Co.  did  then  I  know  not. 
But  assuming  that  what  has  been  said  about  these  things  is  true,  it  has 
nothing  to  do  with  this  case  of  last  year.  What  is  that  case?  Why,  Mr. 
Speaker,  Phelps,  Dodge  &  Co.  in  the  course  of  five  years  imported  $4U,0U0,- 


AN  EXTRAORDINARY  HISTORY.  233 

000  worth,  or  thereabouts,  of  tin.  They  paid  $5,000,000  of  duty,  and  in 
that  time  they  over  valued  their  goods  some  $300,000.  The  total  loss  to  the 
Government  charged  against  them  as  accruing  to  the  revenue  of  the 
country  is  $1,640.  Did  they  intend  to  defraud  the  Government,  or  was 
it  an  error  ? 

Now,  Mr.  Speaker,  when  we  look  at  such  cases  as  this  we  ought  to 
take  into  account  the  surroundings.  Is  there  any  man  living  who  sup- 
poses that  Phelps,  Dodge  &  Co.  would  rob  the  country  of  $1,640? 

Mr.  BcTLER,  of  Massachusetts. — No. 

Mr.  Foster. — That  is  all  that  is  charged  against  them.  Does  any  man 
believe  that  they  would  rob  the  country  of  that  sum  ? 

Mr.  Butler,  of  Massachusetts. — No. 

Mr.  Foster. — That  was  the  aggregate  for  five  years,  giving  an  average 
of  about  $300  a  year.  We  must  judge  a  case  of  this  kind  by  its  sur- 
roundings. If  a  mendicant  or  ordinary  vagabond  should  obtain  $1,000 
that  he  could  not  account  for,  we  would  call  him  a  thief.  But  when  you 
take  into  account  the  standing  of  Phelps,  Dodge  &  Co.  and  their  vast  busi- 
ness, we  must  admit  that  they  were  simply  errors;  and  if  errors  amounting 
to  $300  a  year  should  creep  into  a  business  of  $8,000,000  a  year,  is  this 
the  great  outrage,  is  this  the  great  wrong  to  the  Government  that  the 
gentleman  argues  should  ruin  forever  the  integrity  of  a  leading  firm  like 
Messrs.  Phelps,  Dodge  &  Co.  ? 

Mr.  Speaker,  I  say  shame  on  the  Government,  and  shame  on  the  men  in 
Congress  or  out  of  it,  who  plead  for  such  so-called  justice  or  equity  as 
against  such  an  honorable  firm. 

Now,  Mr.  Speaker,  if  I  should  invite  the  gentleman  from  Massachusetts 
to  my  house  to  dine,  and  the  next  day  should  find  a  spoon  of  mine  in  his 
pocket,  nobody  would  believe  that  he  had  stolen  it,  but  if  found  in  the 
pockets  of  a  vagabond  we  would  know  that  he  was  the  thief. 

The  trouble  is,  Mr.  Speaker,  the  gentleman  from  Massachusetts  (Mr. 
Butler)  has  in  his  pockets  a  large  fee  paid  to  him  out  of  this  robbery  as 
counsel  for  Jayne,  and  it  is  getting  too  hot  to  hold  it  there  comfortably. 
This  accounts  for  the  writhings,  and  contortions,  and  abuse  of  the  name  of 
Christian  by  the  gentleman  to-night. 

Mr.  Speaker,  I  give  it  as  my  deliberate  opinion,  and  the  country  believe, 
and  I  believe,  and  the  Committee  on  Ways  and  Means  unanimously  be- 
lieve, this  Congress  believe  that  Phelps,  Dodge  &  Co.  were  deliberately 
robbed;  and  I  believe,  furthermore,  that  the  country  never  will  do  justice 
by  them  until  they  pay  them  back  the  money  thus  extorted  from  them. 
Without  attempting  to  elaborate  the  question,  that  is  my  deliberate  and 
honest  conviction  of  that  case. 


234  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Mr.  Butler,  of  Massachusetts.— Then  why  not  bring  in  a  bill  to  repay 
them  ? 

Mr.  Foster. — The  time  has  not  come  for  that  yet.  I  have  now  said  all 
I  desire  to  say  upon  this  subject. 

SPEECH  OF  HON.  HENRY  L.  DAWES. 

Mr.  Speaker,  I  began  this  investigation  in  reference  to  the  effect  of 
giving  half  of  the  proceeds  of  uncollected  taxes  and  one  half  of  the  fines 
and  penalties  to  men  who  would  turn  their  backs  upon  other  employ- 
ments at  fixed  salaries  to  engage  in  this  pursuit.  I  followed  it  up  as 
well  as  I  could  in  the  last  Congress.  And  upon  the  very  second  day 
of  this  session,  through  the  aid  of  this  House,  I  called  upon  the  Treas- 
ury Department  to  disclose  what  my  colleague  (Mr.  Butler)  has  shown 
here  to-night  to  be  the  effect  on  honest  men  of  this  system,  which  has 
been  enforced  in  this  country  for  the  last  fifty  years,  upon  the  collection  of 
the  revenue  ;  an  effect  which,  I  agree  with  him,  has  been  continually 
growing  worse  and  worse,  until  with  him  I  believe  that  under  all  the 
force  and  effect  of  this  system  of  moieties  there  has  come  into  the  Treasury 
of  this  kind  of  taxes  but  about  two  thirds.  Was  it  not  time,  then,  was  it 
not  a  matter  that  commended  itself  to  the  Committee  on  Ways  and  Means, 
to  look  about  and  see  whether  there  could  not  be  some  improvement  upon  a 
system  of  collecting  and  enforcing  revenues  wliich  my  colleague  describes 
in  this  way  :  that  the  less  honesty  a  man  has  who  is  engaged  in  enforcing 
the  revenue  laws  the  better  ;  that  efficiency,  according  to  his  idea,  and 
success,  according  to  his  idea,  are  incompatible  with  honesty  in  the  public 
service  ;  and  therefore  you  must  have  agreed  to  the  old  adage,  "  tliieves 
against  thieves  and  rogues  to  hunt  rogues?" 

Sir,  it  did  occur  to  me  as  a  member  of  the  Committee  on  Ways  and 
Means,  and  I  accordingly  set  on  foot  the  investigation  which  resulted  in  a 
unanimous  vote  of  this  House  that  that  system  shall  continue  no  longer; 
it  did  occur  to  me  that  better  than  imposing  new  taxes  would  be  an  im- 
provement in  the  system  by  which  the  other  third  of  those  taxes  already 
imposed  should  flow  into  the  treasury  of  the  United  States,  rather  than  into 
the  pockets  of  those  men  of  whom  my  colleague  says  that  the  chief  com- 
mendation they  have  for  their  services  is  that  they  have  no  honesty  to 
embarrass  or  blunt  them  in  their  ways  and  means  of  detecting  rogues. 
Sir,  no  effort  of  my  colleague  or  any  other  gentleman  on  this  side  of  the 
House  will  enable  him  or  them  to  enforce  upon  the  republican  party  as  a 
part  of  its  creed  or  policy  any  such  doctrine  as  that.  Honesty  and  effici- 
ency in  the  public  service,  properly  rewarded  by  fixed  and  fair  salaries  and 


AN  EXTRAORDINARY  HISTORY.  235 

compensation,  I  put  against  my  colleague's  policy  and  scheme,  coming 
down  though  it  may  from  the  years  that  are  passed,  bringing  down  though 
it  does  no  other  fruit  than  inordinate  fortunes  in  the  pockets  of  informers 
and  prosecutors,  while  the  deficiencies  in  the  collection  of  tlie  revenue  go 
on  increasing  year  after  year  until  the  startling  announcement  is  made 
upon  this  floor,  by  the  chief  apostle  and  defender  of  it  all,  that  the  result 
and  fruit  of  it  is  that  under  this  great  system  not  more  than  two  thirds  can 
be  got  into  the  Treasury  !  Sir,  some  other  purpose,  some  other  method, 
some  other  idea  worthy  of  efl'ort  on  our  part  should  stimulate  us  to  action 
and  inv^estigation,  if  the  fruit  of  it  all  is  going  to  be  such  a  sorry  and  sad 
picture  as  that  which  my  colleague  himself  spreads  out  here  as  the  fruit 
of  the  system. 

Sir,  it  was  in  this  manner  that  these  investigations'originated  in  the  Com- 
mittee on  Ways  and  Means.  My  colleague  had  much  to  say  about  the 
petty  pursuits  of  the  Committee  on  Ways  and  Means. 

He  has  criticised  and  complained  of  the  action  of  the  Committee  on 
Ways  and  Means  in  pursuing  this  investigation,  and  has  spread  before  the 
House  his  troubles  with  one  or  two  members  of  the  committee,  and  has 
sought  to  impugn  the  motives  of  the  Committee  on  Ways  and  Means 
in  their  recommendation  to  this  House  and  in  their  action,  which  com- 
manded the  unanimous  vote  of  the  House.  I  participate  in  none  of  that 
controversy. 

Having  approached  this  matter  long  before  mv  colleague  came  into  it, 
T  have  pursued  the  even  tenor  of  my  way  as  Chairman  of  the  Committee, 
directing  as  well  as  I  could  the  examination,  for  the  purpose  of  demonstrat- 
ing what  was  wrung  from  the  very  officials  in  the  administration  of  public 
affairs  here  at  Washington  with  a  view  to  the  re])eal  of  that  system.  Even 
the  last  Secretary  of  the  Treasury,  when  before  the  Committee  on  Ways 
and  Means,  declared  it  his  conviction  that  this  system  ought  to  be  aban- 
doned. Even  Jayne  declared  before  the  committee  that  the  system  was 
unwise,  and  that  it  ought  not  to  be  continued.  No  man,  no  official,  has 
appeared  before  the  committee  or  has  made  any  communication  to  the 
House  who  has  not  sustained  this  riew.  The  late  Secretary  of  the  Trea- 
sury (Mr.  Boutwell)  not  only  voted  to  repeal  all  of  these  laws,  but  he  de- 
clared in  his  place  in  the  Senate  but  a  few  days  ago  that  thi^  same  Mr. 
William  E.  Dodge,  who  was  put  in  the  front  here  by  my  colleague,  was  an 
honest  man. 

Sir,  how  much  cooperation  in  this  work  of  investigation  have  we 
received  at  the  hands  of  my  colleague?  Although  he  had  notice  from 
the  committee  whenever  any  testimony  was  introduced  there  with  which 
his  name  was  connected,  he  failed  to  present  himself  there  to  be  heard 


236  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

upon  this  question,  as  he  has  failed  up  to  this  hour  to  give  the  House 
the  benefit  of  his  views  upon  it.  He  has  no  cause  of  complaint  against 
the  Committee  on  Ways  and  Means  for  the  manner  in  which  they  have 
pursued  this  investigation,  so  far  as  he  is  personally  concerned.  He  had 
personal  notice  every  time  any  testimony  appeared  before  that  com- 
mittee touching  him,  so  that  he  might  have  the  opportunity  to  appear 
there.  No  man  has  cause  to  complain  of  the  action  of  the  committee. 
We  invited  the  men  who  were  receiving  these  moieties  to  appear  ;  we 
invited  the  ofiBcials  in  New  York,  and  Boston,  and  Philadelphia,  who 
were  receiving  these  moieties ;  but  they  could  not  find  time  or  oppor- 
tunity to  appear  here  and  give  us  the  benefit  of  their  counsel.  And  yet, 
Mr.  Speaker,  I  saw  them  around  the  galleries  of  this  House  and  at  the 
other  end  of  the  Capitol  when  the  question  was  pending  whether  these 
moieties  should  be  cut  off  entirely.  I  saw  them  in  the  lobbies  at  this 
and  the  other  end  of  the  Capitol.  There  was  opportunity  and  time 
enough  for  them  to  come  to  Washington  to  give  the  aid  of  their  advice 
to  legislators  by  their  votes  upon  that  measure  of  repeal,  but  up  to  this 
hour  the  Committee  on  Ways  and  Means,  so  far  as  they  are  concerned 
and  so  far  as  my  colleague  is  concerned,  have  been  compelled  to  grope 
in  the  dark,  and  gather  up  by  die  best  means  they  could  the  infor- 
mation upon  this  subject  which  could  be  wrung  from  unwilling  witnesses. 

Sir,  whatever  others  may  say  of  the  effect  upon  the  party,  and  the 
damage  to  the  republican  party  that  a  republican  Committee  on  Ways 
and  Means  has  inflicted  by  these  proceedings,  I  have  this  to  say,  that  al- 
though I  have  served  on  many  committees  in  Congress,  on  none  of  them  do 
I  look  back  to  the  work  accomplished  with  more  pride  and  satisfaction 
than  upon  the  work  that  has  been  accomplished  by  the  present  Committee 
on  Ways  and  Means,  by  which  they  have  wiped  out  of  the  statute  book 
forever  that  blemish  upon  the  administration  which  hitherto  has  prevailed; 
a  provision  that  in  order  to  have  an  efficient  prosecutor  you  must  have  a 
dishonest  man,  and  that  in  order  that  your  officers  shall  pursue  with  energy 
the  calling  of  enforcing  the  revenue,  they  must  be  stimulated  by  one  half 
of  all  the  fruits  they  can  gather  from  infractions  on  it. 

Sir,  I  wish  to  detain  the  House  no  longer  with  comments  upon  this  work 
of  the  Committee  on  Ways  and  Means.  I  have  no  personal  controversy,  as 
I  have  said,  with  my  colleague.  There  is  nothing  that  has  transpired  in 
that  committee,  over  which  by  your  appointment,  sir,  I  have  sat  as  chair- 
man during  this  investigation,  of  which  any  gentleman  in  this  House  has 
any  just  cause  to  complain.  The  committee  have  submitted  to  this  House 
and  to  the  other  the  results  of  their  work.  The  unanimous  approval  of 
both  branches  of  Congress  is  sufficient  for  them.     If  I  wanted  any  other 


AN  EXTRAORDINARY  HISTORY.  237 

proof  of  the  force  and  power  of  the  public  commenclation  of  this  act,  I 
would  point  to  the  effort  of  my  colleague  here  to-night  to  baffle  this  current 
and  to  struggle  against  this  condemnation  of  a  system  which  I  am  sorry  to 
see  he  has  espoused,  and  whicli  he  feels  bound  to  defend. 

SPEECH  OF  HON.  LYMAN  TREMAIN,  OF  NEW  YORK. 

Mr.  Treraain  next  obtained  the  floor,  and  addressed  the  House  as  fol- 
lows : 

Mr.  Speaker,  understanding  that  there  is  no  other  member  of  the  Commit- 
tee on  Ways  and  Means  who  desires  to  address  the  House  to-night,  it  seems 
to  me  that  I  cannot,  consistently  with  the  duty  I  owe  to  an  honored  firm 
of  constituents,  permit  this  House  to  adjourn  without  raising  my  voice  to 
repel  the  most  extraordinary  and  unjustifiable  aspersions  that  have  been 
uttered  here  to-night  upon  the  floor  of  the  American  Congress.  Phelps, 
Dodge  &  Co.  are  my  constituents.  For  a  quarter  of  a  century  that  firm  has 
occupied  a  position  at  the  head  of  the  mercantile  community  of  the  great 
commercial  emporium,  with  no  stigma  or  stain  resting  upon  their  honor  or 
upon  their  good  name. 

To-night  the  gentleman  from  Massachusetts  (Mr.  Butler)  has  constituted 
himself  their  accuser,  has  appeared  as  witness  against  them,  and  has  acted 
as  their  judge.  No  charges  are  served  upon  that  firm  to  appear  in  this 
hall ;  no  counsel  has  a  right  to  appear  here  to  defend  them.  Slanders  are 
uttered  here  for  which  a  man  would  be  held  personally  responsible  before 
the  tribunals  of  his  country  if  uttered  where  he  would  be  deprived  of  the 
immunity  that  shields  him  here.  He  is  here  protected  by  the  broad  aegis 
of  the  Constitution,  which  declares  that  no  man  shall  be  held  responsible 
for  words  uttered  in  debate  upon  the  floor  of  this  House. 

And  yet  what  have  we  heard  here  to-night  ?  For  the  purpose  of  de- 
fending two  dead  and  buried  institutions,  and  in  pronouncing  an  anathema 
upon  the  action  of  the  Committee  on  Ways  and  Means  of  this  House  for 
their  action  in  condemning  and  hurling  into  that  infamy  from  which  no 
power  on  earth  can  lift  them — the  rotten  Jayne  moiety  system,  and  the  in- 
fernal Sanborn  contract — the  gentleman  from  Massachusetts  has  held  up 
the  firm  of  Phelps,  Dodge  &  Co.  as  swindling  merchants,  as  perjured  vil- 
lains, as  men  who  have  been  engaged  for  years  in  attempting  to  defraud 
the  revenues  of  this  Government,  and  as  men  who  ought  to  be  held  up  be- 
fore this  crowded  audience,  upon  an  accusation  which  shall  go  upon  the 
wings  of  the  lightning  from  one  end  to  the  other  of  this  Republic,  as  men 
who  have  cheated  the  community  in  which  they  live,  in  obtaining  that 
reputation  and  that  honor  which,  forsooth,  are  to  be  destroyed  before  the 


238  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

keener  criticisms,  the  sharper  instincts,  and  the  wiser  sagacity  of  the  hero 
of  tlie  Sanborn  contract  and  the  Jayne  moiety  system. 

No  man  can  deny  the  power  of  the  gentleman  from  Essex.  But  he  has 
not  the  power  to  raise  the  dead  ;  and  until  he  has  that  power  he  can  never 
reverse  the  judgment  of  this  House  and  of  this  country  that  the  Sanborn 
contract  and  the  manner  of  its  performance  constitute  the  most  disgrace- 
ful and  difc'gusting  performance  tliat  has  ever  brought  discredit  upon  the 
American  name.  With  all  his  power  to  please,  and  to  call  down  the 
plaudits  of  the  galleries,  the  gentleman  from  Massachusetts  can  never  roll 
back  the  popular  tide  or  reverse  that  judgment  which  is  the  judgment  of 
the  American  people,  that  the  tcenes  which  have  transpired  in  New  York, 
of  which  Phelps,  Dodge  &  (Jo.  were  the  victims,  are  as  deserving  of  the 
condemnation  of  an  honest  and  a  justice  loving  community  as  were  the 
diabolical  transactions  of  the  inquisition  and  of  the  star  chamber. 

Sir,  there  is  in  all  this  broad  land  but  one  man  who  has  the  boldness  to 
stand  up  against  the  judgment  of  an  honest  people,  against  the  unanimous 
expression  of  this  House,  against  the  conscience  and  the  honest  opinions  ot  a 
thoughtful  and  a  truth  loving  community  in  regard  to  these  transactions. 
The  time  for  making  the  defence  was  when  the  gentleman  from  Massachu- 
setts was  invited  and  he  did  not  come.  He  was  sick  !  He  will  be  sicker 
yet  before  he  gets  through  with  his  connection  with  the  Sanborn  and  the 
Jayne  infamies.  No  man  is  able  to  stand  up  before  the  American  people 
and  sustain  these  atrocious  proceedings. 

The  gentleman  has  said  that  Phelps,  Dodge  &  Co.  were  guilty  of  frauds 
in  regard  to  statuary.  Sir,  a  falser  accusation  was  never  made.  1  know 
well  the  history  of  that  stale  slander,  which  has  been  picked  up  from  the 
gutters  and  peddled  in  your  cloak  room.     It  is  false  in  every  part  of  it. 

Let  me  say,  in  the  first  place,  that  in  the  firm  of  Phelps,  Dodge  &  Co,  the 
name  of  Phelps  is  retained  although  the  man  who  bore  it  has  been  dead 
for  many  years.  Under  a  statute  of  New  York  the  name  of  a  deceased 
member  of  a  firm  and  of  the  old  firm  itself  may,  under  certain  conditions,  be 
continued  by  those  who  succeed  to  the  business.  Of  course  it  would 
never  be  continued  except  where  it  has  acquired  credit  and  standing  by 
probity  and  integrity,  and  is  a  name  thai  ought  to  be  perpetuated. 

Sir,  it  was  nearly  fifty  years  ago  that  an  Act  of  Congress  was  passed  in- 
creasing the  duty  upon  lead  in  pigs  and  bars  from  one  to  three  cents  per 
pound.  What  was  the  occasion  of  the  increase  ?  Lead  mines  had  been 
discovered  at  Galena,  Illinois,  and  according  to  the  system  of  that  day,  of 
protecting  American  productions  and  American  industry,  this  duty  was 
increased  200  per  cent.  There  had  before  that  time  grown  up  in  the 
cities  of  Baltimore,  Philadelphia,  New  York  and  Boston  large  manufactur- 


AN  EXTRAORDINARY  HISTORY.  239 

ing  establish mentp,  concerned  in  the  manufacture  of  white  lead,  in  one  of 
which  the  old  firm  of  1  helps  &  Peck  (the  name  of  the  dead  Phelps  being 
perpetuated  in  the  firm)  were  interested.  When  that  statute  was  passed, 
somewhere  from  1820  to  1824 — I  do  not  remember  the  exact  year — these 
large  establishments  found  that  their  business  was  failing  ;  and  they 
looked  around  to  see  in  what  manner  they  could  reimburse  themselves  for 
the  losses' they  sustained  by  reason  of  the  legislation  of  Congress.  They 
found  that  this  statute,  which  was  under  the  old  system  of  duties,  had  lelt 
upon  old  lead,  so  called,  an  ad  valorem  duty  of  15  per  cent. 

I  never  heard  that  there  was  anything  wrong  in  acting  precisely  accord- 
ing to  law.  These  manufacturing  establishments  consequently  concluded 
to  import  old  lead.  I  will  show  you  by  and  by  that,  as  to  the  statuary 
story,  even  the  firm  of  Phelps  &  Peck  had  no  more  connection  with  it  than 
the  gentleman  from  Essex.  There  was  a  great  demand  for  old  lead.  The 
consequence  was  that  in  the  old  establishments  in  England  the  roofs  that 
were  made  of  old  lead  were  taken  off,  new  lead  put  on,  and  the  old  lead 
imported  to  this  country.  Merchants  and  the  oflBcers  of  the  customs  sub- 
mitted the  question  to  the  Treasury  Department,  where  it  was  decided, 
properly  and  legally,  that  no  more  than  15  per  cent,  could  be  collected  on 
old  lead  under  the  statute,  although  that  lead  was  afterward  used  for  the 
ordinary  purposes  for  which  pig  lead  and  bar  lead  would  be  used. 

Congress,  when  the  next  session  came,  proceeded  to  cure  that  omission 
in  the  old  law.  They  did  so.  Then  these  gentlemen  looked  around,  and 
they  found  that  there  was  still  another  provision  in  the  tariff  laws  under 
which  musket  balls  and  bullets  were  admitted  at  a  duty  of  15  per  cent,  ad 
valorem.  There  was  then  a  wonderful  demand  for  bullets  and  musket 
balls,  old  and  new.  They  were  brought  over  in  immense  numbers.  Again 
the  revenue  officers  submitted  the  question  to  the  Government,  and  the 
Treasury  officials  decided  that  the  importation  of  bullets  and  balls  at  15 
per  cent,  ad  valorem  was  according  to  law  ;  that  the  Government  could 
not  help  itself.  At  the  next  session  another  law  was  passed  patching  up 
that  hole  in  the  tariff.  But  afterward  it  was  discovered  that  there  was 
still  another  item  left  with  a  duty  of  only  15  per  cent,  ad  valorem — and 
that  was  leaden  weights  and  leads  used  by  sailors.  There  was  then  a 
wonderful  demand  all  at  once  for  weights  and  leads.  The  old  weights 
were  found  to  be  very  defective.  Every  shipper  and  every  sailor  wanted 
a  new  set  of  leads.  A  large  number  were  imported.  In  the  meantime  a 
suit  was  brought  in  New  Y^ork  by  Mr.  Price,  the  district  attorney,  but  he 
was  ignominiously  beaten  ;  for  the  Judge,  upon  the  first  hearing  of  the 
case,  dismissed  the  complaint  on  the  part  of  the  Government.  Then  this 
defect  in  the  law  was  supplied.     But  there  was  still  left  the  old  statute 


240  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

which  said  that  statuary  and  busts  should  be  admitted  either  free  of  duty 
or  at  a  small  duty.  Well,  there  never  was  such  a  demand  for  busts  since 
the  time  when  my  colleague  (Mr.  Cox)  got  his  bust  made  when  he  and  I  were 
in  Florence.  Why,  sir,  they  had  statues  of  all  the  great  men  of  ancient  and 
modern  times.  They  had  Moses  and  Aaron,  and  Benjamin  and  Joshua, 
and  Cajsar  and  Napoleon,  and  Wellington  and  Washington,  and  Jefferson, 
and  everybody  else,  run  into  statues  on  the  other  side.  Some  of  them 
came  over,  to  be  sure,  as  has  been  said,  with  an  eye  knocked  out,  or  a 
nose  battered,  or  fingers  dislocated  ;  still  you  could  recognize  them.  They 
came  in  great  quantities.  A  suit  was  undertaken  to  be  brought  in  New 
York  ;  but  Mr.  Price  had  had  sufficient  experience  in  that  line,  and  he 
thought  he  would  not  venture  upon  the  experiment.  They  went  up  to 
Boston  and  they  sued  an  honorable  old  merchant,  who  was  one  of  these  white 
lead  manufacturers,  for  importing  these  leaden  statues  which,  according  to 
the  language  of  the  gentleman  from  Massachusetts,  were  transferred  to  the 
melting  pots.  They  brought  suit  against  him.  What  did  the  old  mer- 
chant do  ?  His  name  I  do  not  remember — perhaps  some  one  from  Massa- 
chusetts here  will. 

A  Member. — His  name  was  Leavitt. 

Mr.  Tremain. — Yes;  I  think  his  name  was  Leavitt.  What  did  he  do? 
No  doubt  if  the  lawyer  from  Essex  had  been  there  he  would  have  run  for 
his  office  if  the  Government  officer  had  not  got  there  ahead  of  him.  As 
he  was  not  there  they  had  to  take  a  man  of  less  importance,  and  they  em- 
ployed a  man  you  may  have  heard  of  by  the  name  of  Daniel  Webster.  Mr. 
Webster  went  into  court  to  defend  his  old  friend,  an  old  Boston  merchant. 
They  proved  he  imported  these  old  leaden  statues,  and  they  probably  could 
have  satisfied  the  jury,  if  that  had  been  material,  that  he  meant  to  melt 
them  as  soon  as  he  had  got  them  into  his  store.  What  did  Mr.  Webster 
do  ?  Mr.  Webster  said  to  the  Judge,  "  I  ask  you  to  instruct  the  jury  that 
the  only  question  in  this  case  is  a  question  of  fact,  whether  the  articles 
seized  by  the  Government  were  or  were  not  statuary."  It  was  not  a  ques- 
tion of  law,  but  a  question  of  fact  for  the  jury.  The  Judge,  as  he  was 
bound  to  do,  responded  to  that  request  by  charging  the  jury  in  accordance 
with  the  request,  and  the  jury  without  leaving  their  seats  gave  a  verdict 
in  favor  of  the  defendant  that  he  had  violated  no  law. 

And  that  is  all  there  is,  Mr.  Speaker,  of  this  stale  old  statuary  story,  dug 
up  from  the  gutters  to  sustain  the  rotten  cause  of  the  Sanborn  contract, 
and  of  the  Jayne  moiety  system,  and  to  bring  discredit  upon  the  name  of 
Phelps,  Dodge  &  Co. 

Now,  whether  these  transactions  by  the  importers  were  moral  or  im- 
moral is  a  question  I  am  not  called  upon  to  determine.     It  is  enough,  how- 


AN  EXTRAORDINARY  HISTORY.  241 

ever,  to  say  in  this  connection  that  at  that  time  no  member  of  the  present 
firm  of  Phelps,  Dodge  &  Co.  liad  any  connection  with  it.  It  is  enough  to 
say  that  the  firm  which  was  then  in  existence,  and  the  predecessor  of  this 
firm,  was  the  old  firm  of  Phelps  &  Peck  ;  that  the  firm  of  Phelps  &  Peck  never 
had  anything  to  do  with  the  importing  of  leaden  statuary  and  busts,  and 
that  the  story,  even  as  to  them,  is  made  out  of  the  whole  cloth,  thrown  in 
here  when  there  was  no  man  supposed  to  be  familiar  with  the  facts  to  de- 
fend the  firm  of  Phelps,  Dodge  &  Co.  against  a  charge  entirely  in  harmony 
with  the  general  character  of  the  transactions  which  the  Committee  on 
Ways  and  Means  have  properly  sought  to  reform,  and  this  House  has  by 
its  unanimous  judgment  condemned. 

Again,  the  gentleman  tells  us  Mr.  Dodge  claimed  a  particular  interpreta- 
tion of  the  statute  in  regard  to  the  amount  of  duties  which  should  be  col- 
lected upon  tin  plates,  I  am  informed  by  an  honored  merchant  from  Bos- 
ton on  the  floor  of  this  House,  since  that  charge  was  made — for  I  knew  noth- 
ing of  it,  and  this  is  no  time  to  be  called  on  to  defend  an  absent  man  against 
a  charge  made  under  the  privileges  of  the  House — I  am  informed  by  that 
honored  merchant,  who  is  familiar  with  the  whole  transaction,  that,  in  regard; 
to  that,  the  Treasury  Department  fully  sustained  the  claim  which  was  made 
by  Mr.  Dodge. 

Allusion  has  been  made  to  the  action  of  the  Committee  on  Ways  and. 
Means  in  recommending  the  tarift*  bill  which  proposed  a  specific  duty  upon, 
tin,  and  boxes' in  which  it  was  contained.  So  far  from  being  a  cause  of. 
censure  against  the  firm  of  Phelps,  Dodge  &  Co.,  that  transaction  is  evi- 
dence of  their  strong  desire  to  conform  to  the  law,  and  to  guard  against 
the  defects  and  abuses  existing  under  the  law  which  had  been  the  means 
of  robbing  them  of  $271,000.     Look  at  it  for  a  moment. 

What  was  the  old  law  which  is  now  condemned  ?  If  a  man  imported 
tin  manufactured  in  the  interior  of  England — and  it  is  mostly  manufac- 
tured in  Wales— if  he,  by  mistake,  omits  to  put  into  the  invoice  the  expense 
of  cartage,  or  of  telegrams,  or  of  expressage,  or  of  boxes,  or  of  any  other 
item  whatever,  under  that  old  law,  which  finds  its  vindicator  here,  not  only 
was  the  article  forfeited,  but  the  whole  invoice  in  which  that  article  was 
contained  was  forfeited. 

Nay,  more;  it  was  not  necessary  to  show  that  there  was  any  intention 
to  defraud  the  Government.  The  Supreme  Court  decided  that  when  the 
word  "fraudulently"  was  omitted  it  was  only  necessary  to  show  that  the 
invoice  was  entered  at  less  than  the  actual  cost,  and  that  it  became  a  mat- 
ter of  law  in  such  a  case  to  instruct  the  jury  that  the  whole  invoice  wa&- 
forfeited.  It  was  under  such  an  odious  system  that  Phelps,  Dodge  &  Co.. 
were  sought  to  be  charged  with  $271,000  of  forfeiture.     Now  what  was  the 

16 


242  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

amount  of  duty  of  which  it  was  charged  thoy  defrauded  tlic  Government? 
AVhy,  sir,  but  81,600.  Here,  sir,  is  a  firm  which  had  paid  more  than  fifty 
million  dollars  into  the  Treasury;  while  the  Ways  and  Means  Committee 
state  it  has  been  proved  before  them  that  they  overpaid  to  the  Government 
on  other  articles  three  or  four  thousand  dollars  of  duty.  Yet  these  men 
were  to  be  held  responsible  in  the  large  amount  I  have  named  for  these 
trifling  inaccuracies  in  their  invoices.  It  was  to  guard  against  that  that 
Phelps,  Dodge  &  Co-,  and  all  the  other  tin  merchants  and  importers  of  the 
country,  presented  the  memorial  to  Congress  from  which  the  gentleman 
from  Massachusetts  only  read  the  first  name,  that  of  Phelps,  Dodge  &  Co., 
and  that  memorial  asked  that  the  tariff  be  changed.  They  were  willing  to 
have  put  on  a  duty  which  would  give  the  Government  greater  revenue  than 
they  h&ve  derived  from  that  source  for  the  last  three  years.  They  thought 
one  cent  on  the  tin  and  boxes  was  enough.  The  Committee  of  this  House 
put  it  at  one  and  a  quarter  cents.     That  is  what  there  is  about  that. 

Now,  who  is  Mr.  Dodge?  He  is  a  man  who  has  been  a  member  of  this 
House,  the  peer  of  any  gentleman  upon  this  floor,  the  man  who,  after  all 
these  charges  were  made  against  him,  was  elected,  by  the  unanimous  vote 
of  the  merchants  of  New  York,  President  of  the  Chamber  of  Commerce  in 
that  great  city,  a  position  that  he  occupies  to-day.  Can  a  man  acquire 
such  a  reputation  and  so  enjoy  the  confidence  of  his  fellow  merchants  if  he 
is  that  rotten,  and  corrupt,  and  swindling  merchant  that  he  has  been  held 
up  before  this  House  to  be  by  the  gentleman  from  Massachusetts?  Shall 
his  good  character  go  for  nothing  ?  Can  long  years  of  integrity  and 
probity  go  for  nothing  ?  Shall  his  reputation  for  Christianity  and  piety, 
evidenced  by  the  fruits  that  are  welcomed  everywhere  by  the  Christian 
community  as  springing  from  a  good  heart,  go  for  nothing-  ?  Is  such  a  man 
to  be  ridiculed  before  your  galleries  as  a  man  that  preaches  in  the  day 
time  and  prays  at  night?  Is  the  American  Congress  to  listen  to  harangues 
of  that  character  ? 

Then  the  gentleman,  after  haranguing  the   House  for  two  hours,  now 

seeks  to  stifle  the  voice  of  the  representative  from  New  York,  who  has  no 

other  interest  at  all  in  this  firm  except  simply  to   have  justice  done.     It 

seems  to  me  that  this  whole  debate  to-night  has  been  in  the  nature  of  a 

funeral  oration  by  the  gentleman  from  Massachusetts  over  the  dead  ;  the 

dead    and   the   corrupt;    the    dead  and  the   condemned;  the   dead  and 

:the   infamous.     And    if   the    gentleman  from  Massachusetts   thinks    that 

'.he  is  to  be  held  as  the  savior  of  the    republican   party  from  the  Ways 

and   Means    Committee,  to    whose   eleven    members   he  so  triumphantly 

•bids    defiance,    he    will    find    that    he    is    laboring    under    an    egregious^ 

onistake. 


AN  EXTRAORDINARY  HISTORY.  243 

The  people  are  quick  to  discover  an  honest  desire  on  the  part  of  the 
Ways  and  Means  Committee  and  of  this  House  to  correct  abuses  and  re- 
form the  existing  laws.  This  House,  by  both  its  parties,  to  their  honor  be 
it  said,  without  regard  to  political  considerations,  have  condemned  these 
laws  and  wiped  them  out  of  existence,  and  they  will  be  heard  of  I  trust  no 
more  forever. 

There  was  another  subject  I  desired  to  speak  on,  but  if  the  House  will 
give  me  permission  to  print  my  remarks,  I  will  not  detain  it  longer  this 
evening. 

Mr.  Butler,  of  Massachusetts. — If  there  be  anything  personal  in  them 
you  cannot. 

Mr.  Tremain. — I  will  tell  the  gentleman  that  I  intend  my  remarks  to  re- 
late to  the  extraordinary  debate,  the  extraordinary  personalities,  the  extra- 
ordinary course  that  was  taken  in  the  closing  hours  of  the  debate  upon  the 
Geneva  award  bill,  a  bill  that  has  passed  this  House.  But  I  rejoice  for 
the  honor  of  my  country  that  the  triumph  that  was  won  here  is  destined, 
I  believe,  to  be  short  lived  and  to  yield  no  fruits.  It  requires  not  merely 
the  consent  of  this  House,  but  the  consent  of  the  Senate  and  the  Presi- 
dent, before  a  raid  can  be  successfully  made  upon  the  public  Treasur}-, 
whereby  four  millions  of  honest  property  can  be  confiscated  and  ten 
millions  can  be  taken  and  given  to  a  class  of  men  who  have  no  claims  in 
law  or  equity  upon  them.  That  question  is  wholly  postponed  and  to  come 
before  this  House  at  its  next  session.  I  desire  to  notice  some  extraordinary 
aspersions,  some  extraordinary  arguments,  some  extraordinary  personal 
remarks  that  were  made  during  that  discussion  ;  and  I  think  it  will  be 
quite  as  proper,  as  that  subject  is  still  alive,  to  speak  to  it  as  to  spend  two 
hours  in  talking  about  dead  issues.  My  speech  would  relate  to  the 
Geneva  award,  and  I  ask  unanimous  consent  to  print  my  remarks  upon 
that  subject. 

Mr.  Butler,  of  Massachusetts. — You  shall  not  have  mine,  sir, 

Mr.  Tremain. — Amen.  You  will  hear  from  mo  at  Philippi.  We  will  meet 
there. 

Mr.  Tremain. — Mr.  Speaker,  it  is  difficult  to  tell  which  most  to  admire, 
the  high  toned  sense  of  honor  and  morality  of  the  gentleman  from  Massa- 
chusetts, who  sees  so  much  fraud  in  the  conduct  of  men  who  have  been 
vindicated  and  sustained  by  the  action  of  a  court  and  jury,  or  his  logic  in 
finding  in  my  argument  a  sufficient  ground  to  condemn  Phelps,  Dodge  & 
Co.  Sir,  I  have  stated  distinctly,  and  the  gentleman  knows  it  well,  that 
Phelps  &  Peck,  who  were  the  firm  in  existence  when  the  statuary  was  im- 
ported, some  forty  or  fifty  years  ago,  had  no  agency  whatever  in  its 
importation.     They  had  no  more  connection  with  it  than  had  the  gentle- 


244  CONGRESS  AND  PHELPS,  DODGE  &   CO. 

man  from  Afassacluisettp,  and  yet,  forsooth,  he  finds  in  my  remarks 
Bufficient  to  sustain  his  charges  against  Phelps,  Dodge  &  Co.,  and  proceeds 
to  indulge  in  a  general  tirade  of  abuse  against  the  merchants  of  this 
country — ^merchants  whose  names  are  synonyms  for  honor,  for  patriotism, 
and  for  integrity,  and  who  would  not  thank  me  for  vindicating  them 
against  the  frivolous  and  unfounded  aspersions  of  the  gentleman  from 
Massachusetts. 

Again,  he  asks  why  did  I  denounce  Jayne?  I  denounced  the  system 
with  which  Jayne  and  Sanborn  were  associated.  I  exonerate  the  officers 
of  the  law,  for  they  are  honorable  officials  in  the  City  of  New  York,  who, 
no  doubt,  did  what  honorable  men  should  have  done  in  executing  the  law. 
I  would  not  be  understood  as  criticising  in  any  manner  the  action  of  the 
revenue  officers  of  New  York,  for  all  of  whom  1  entertain  the  highest  re- 
spect and  esteem.  But  it  was  the  system  I  denounced,  and  I  rejoice  that 
it  has  been  condemned  and  forever  exploded. 


The  debate  here  ended,  and  the  House  at  a  late  hour  adjourned  ;  and 
during  the  remaining  four  days  of  the  session  no  further  allusion  to  the 
subject  of  moieties,  seizures  or  Treasury  contracts  and  irregularities  was 
made  in  either  branch  of  Congress. 

The  firm  of  Phelps,  Dodge  &  Co.,  however,  in  view  of  the  specific  and 
unqualified  charges  renewedly  and  most  publicly  made  against  them  by 
General  Butler  in  his  speech,  and  notwithstanding  the  immediate  answer 
to  and  refutation  of  the  same  by  Messrs.  Roberts,  Foster  and  Tremain,  on 
the  floor  of  the  House,  deemed  it  at  the  same  time  expedient  to  again  come 
before  the  public  in  their  own  behalf;  and,  accordingly,  on  the  27th  of  June, 
1874,  they  caused  to  be  published  the  following  card  : 

CARD  OF  PHELPS,  DODGE  &  CO. 

In  reply  to  the  charges  specifically  preferred  against  them  by  Gen.  Butler^  in  his  speech  before  the 

House  of  Representatives,' June  19^A,  1874. 
To  OUR  Friends  and  the  Public. 

After  the  full  statement  heretofore  published  of  the  difficulty  of  our  firm  with  the  customs 
authorities,  and  the  subsequent  exhaustive  examination  of  the  whole  matter  by  the  Commit- 
tee on  Ways  and  Means,  which  resulted  in  the  entire  remodelling  of  the  "  Moiety  "  and 
"Seizure  Acts,"  wo  had  not  supposed  it  would  be  necessary  to  add  anything  further  in  the 
way  of  explanation.  But  in  the  brutal  and  cowardly  attack  made  upon  us  during  the  closing 
hours  of  Congress  by  General  Butler,  certain  charges  were  preferred  by  him,  in  his  character 
as  a  Representative,  upon  the  floor  of  the  House,  against  our  firm,  so  definite  and  with  so 
much  of  apparent  authority  that  we  feel  called  upon,  in  justice  to  ourselves  and  the  public, 
to  make  once  more  a  brief  statement. 


AX  EXTRAORDINARY  HISTORY.  245 

The  chargea  specifically  preferred  were,  in  the  main : 

First — That  we  had,  as  a  firm,  attempted  to  defraud  the  Government  and  evade  the  revenue 
by  importing  metals  in  the  form  of  works  of  art  and  statuary.  In  reply  to  this  it  is  only 
necessary  to  say  that  the  importations  to  which  General  Butler  referred  were  made  before 
the  firm  of  Phelps,  Dodge  k  Co.  came  into  existence,  and  before  any  one  of  the  present  or 
late  members  of  the  firm  became  connected  with  the  metal  importing  business — the  senior 
member  of  tlie  firm,  William  E.  Dodge,  being  at  the  time  engaged  in  the  dry  goods  business. 

Second — That  in  the  Tariff  Act  of  April,  1864,  which  temix)rarily  increased  the  rates  ol 
duty  on  imports  fifty  per  cent,  Mr.  Dodge  went  to  the  Treasury  and  liad  a  comma  taken  out 
of  one  place  and  put  in  another,  and  thereby  cleared  $2,250,000. 

The  exact  facts  in  respect  to  this  charge  are  as  follows:  In  a  very  full  revision  of  the  tariff, 
as  embodied  in  the  Act  of  June,  1864  (and  not  the  Act  of  April,  1864,  as  specifically  mentioned 
by  General  Butler),  it  was  decided  by  both  Houses  of  Congress,  after  full  discussion,  that  an 
increase  of  duties  on  tin  and  tcrne  plates  would  imperil  the  large  industries  already  taxed 
under  the  internal  revenue,  in  which  tin  was  used  for  the  packing  of  fruits,  lish  and  vege- 
tables, meats  and  the  like,  and  so  tend  to  reduce,  rather  than  increase  the  receipts  of  the 
Treasury.  At  the  same  time  it  was  decided  to  increase  the  duty  on  sheet  iron  galvanized 
with  an  admixture  of  tin — which  article  had  been  imported  under  the  name  of  "  tin  plates 
galvanized,"  and  so  definitely  and  distinctly  named  in  connection  with  and  at  the  same  rate 
as  "galvanized  iron,"  in  every  successive  tariff  since  1857.  The  biM  was  passed  on  the  30th 
of  June  and  went  into  operation  immediately.  On  examining  its  provisions  we  found  that 
while  the  duty  on  "  tin  and  terne  plate  "  remained  unchanged  at  25  per  cent,  ad  valorem,  the 
addition  of  a  comma  after  the  word  '•  plates,"  in  the  clauses  "  tin  plates  galvanized,"  rendered 
the  whole  paragraph  ambiguous  if  not  absurd,  and  apparently  imposed  a  new  duty  of  2i  cents 
per  pound — an  increase  of  100  per  cent  on  existing  duties.  Seeing  how  impossible  it  would 
be  to  enter  our  invoices  at  two  conflicting  rates  for  one  and  the  same  article,  we  applied  at 
once  to  the  Collector  for  a  decision  in  respect  to  the  course  to  be  followed.  The  Collector 
saw  the  difficulty,  and  referred  us  to  Mr.  Fessenden,  then  in  Now  York,  and  just  appointed 
Secretary  of  the  Treasury.  We  called  upon  him,  and  he  immediately  stated  to  us  and  to  the 
Collector  tliat  he  had  been  Chairman  of  the  Senate  Committee  and  also  of  the  Conference 
Committee,  which  had  charge  of  the  Tariff  bill  in  question ;  that  lie  fully  remembered  the  di.s- 
cussion  as  to  tin  plates,  in  which  he  had  taken  part ;  tliat  the  full  sense  of  both  committees 
had  been  that  tin  plates  should  remain  at  25  per  cent  ad  valorem  ;  that  the  "  ojmma  "  had 
evidently  been  added  by  mistake  in  the  haste  of  engrossing,  and  could  not  be  considered  a.s 
the  true  interpretation  of  the  law. 

He  accordingly  ordered  the  Collector  to  pass  the  goods  at  26  per  cent,  and  stated  that  on 
his  return  to  Washington  he  would  issue  fi  special  order  making  the  construction  official : 
and  this  he  did  under  date  of  July  22,  after  taking  full  time  for  consideration  and  consulta- 
tion with  his  former  colleagues  in  Congress  and  the  experts  of  the  Treasury  Department 
As  finally  interpreted  by  Mr.  Fessenden,  moreover,  the  law  was  not  in  our  direct  favor ;  but, 
on  the  contrary,  had  the  technical  error  been  allowed  to  stand,  and  to  entail  a  very  excessive 
increase  of  duties,  the  advance  in  the  price  of  stock  on  hand  would  have  yielded  to  us,  iti 
common  with  all  other  importers  and  dealers,  a  very  considerable  profit  The  facts,  there- 
fore, were  exactly  the  reverse  of  those  stated  by  Gen.  Butler. 

r/iird.— General  Butler  states  that  in  our  large  and  complicated  business  every  invoice 
brought  day  by  day  by  us  to  the  Custom  House  was  wrongly  stated,  and  that  we  were  con- 
sciously and  continually  guilty  of  fraud. 

General  Butler  knows  this  to  be  untrue.     He  knows,  on  the  contrary  (for  as  the  paid 


246  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

attorney  of  the  informer  he  has  given  attention  to  the  subject),  that  after  a  most  careful 
and  merciless  examination  of  some  thousands  of  our  invoices  by  Jayne  and  his  experts,  aided 
by  .ur  own  clerks,  bribed  to  injure  their  employers,  with  the  full  use  of  our  books  and 
papers,  ohere  were  found  only  some  fifty  that  could  in  any  way  be  made  the  subject  of  con- 
troversy ;  and  that  in  the  case  of  some  of  these,  of  from  $20,000  to  $30,000  each,  the 
utmost  possible  loss  to  the  Government  could  not  have  been  in  excess  of  from  80  cents  to  $1 
per  invoice.  And,  furthermore,  that  the  total  loss  claimed  by  the  Government  on  all  the 
invoices  was  only  about  $1,600,  out  of  an  importation  of  some  $40,000,000,  and  covering 
the  space  of  five  years. 

We  believe  General  Butler  further  knows,  but  wilfully  conceals  the  fact  that  the  same 
error  and  misunderstanding  of  the  intricate  law  which  compelled  us,  under  severe  penalties? 
to  invoice  our  goods  both  at  cost  price  and  at  market  price,  led  us,  in  the  case  of  a  great 
number  of  importations,  to  invoice  their  value  above  cost,  which  occasioned  a  gain  to  the 
revenue  and  a  loss  to  ourselves  immensely  greater  than  the  Government  claims  to  have 
lost. 

Finally — looking  at  all  the  circumstances  and  character  of  this  speech,  its  constant  falsifi- 
cations and  perversions  of  truth,  and  its  brutal  personalities,  we  are  quite  willing  to  leave 
the  verdict  as  to  its  efiect  to  any  who  have  fairly  looked  into  the  matter  of  which  it  treats. 

PHELPS,  DODGE  &  CO. 
New  York,  June  26th,  1814. 


THE  TRUE  STORY  OF  THE  LEADEN  STATUARY. 

The  charge  of  importing  lead  in  the  form  of  images  and  statuary,  with  a 
view  of  fraudulently  evading  the  customs  revenue,  having  been  specifi- 
cally but  falsely  preferred  by  Gen.  Butler,  in  his  speech  against  the  firm  of 
Phelps,  Dodge  &  Co.,  it  is  essential  to  the  completeness  of  this  extra- 
ordinary history,  to  incorporate  with  it  at  this  point  the  following 
true  story  of  the  transactions  referred  to,  as  told  for  the  first  time 
completely  by  Hon.  David  A.  Wells,  late  U.  S.  Commissioner  of  Reve- 
nue, in  a  communication  to  the  columns  of  the  N.  Y.  World,  May  11th, 
1874.  As  this  communication,  furthermore,  was  published  full  five 
weeks  before  the  date  of  Gen.  Butler's  speech,  and  was  extensively  circu- 
lated and  noticed  by  the  press  at  the  time  of  its  publication,  the  malice  and 
mendacity  of  Gen.  Butler  in  making  the  false  imputations  in  question  a 
ground  for  a  fresh  assault  on  a  firm  which  he,  through  his  clients,  had  assist- 
ed in  persecuting,  is  only  too  evident. 

A    CURIOUS    CHAITER    IN    ECONOMIC    HISTORY. 

There  is  an  amusing  old  story  told  of  the  magistrates  of  a  certain 
country  town  in  France,  who,  before  the  days  of  street  lamps  and  gas, 
and  as  a  better  security  against  the  unlawful  acts  of  "vagrom  men," 
passed  an  ordinance  that  "  no  citizen  should  walk  out  after  dark  without  a 


AN  EXTRAORDINARY  HISTORY.  247 

lantern,"  and  that  disobodience  of  the  law  should  entail  a  heavy  penalty. 
The  watch,  vigilant  in  the  performance  of  duty,  accordingly  arrested,  the 
first  night  after  the  law  took  effect,  a  well  known  and  estimable  individual, 
but  of  waggish  propensities,  and  hauled  him  up  before  the  local  Dogberry 
on  a  charge  of  having  broken  the  statute.  The  defendant,  however,  on 
being  asked  why  punishment  should  not  be  inflicted  upon  him,  averred 
that  he  had  committed  no  offence,  and,  in  support  of  his  plea,  produced  a 
lantern.  It  being  rejoined  that  the  lantern  had  no  candle,  he  nexl  main- 
tained that  the  law  did  not  require  that  the  lantern  should  contain  any 
candle  ;  and  the  statute  being  examined  and  the  defesce  found  valid,  the 
arrested  party  was  dismissed,  and  the  law  so  amended  as  to  read,  "  that  no 
citizen  should  hereafter  walk  out  after  dark,  without  a  lantern  and  a 
candle." 

The  next  night  the  same  person  being  found  walking  in  darkness 
was  again  arrested  and  arraigned,  but  again  maintained  that  ho  had  com- 
mitted no  ofifence  ;  and,  in  proof  thereof,  produced  a  lantern  and  showed 
that  it  contained  a  candle.  "  But  the  candle,"  said  Dogberry,  "  is  not 
lighted."  "And  the  law,"  rejoined  the  wag,  "  does  not  require  that  it  should 
be;"  and  this  interpretation  being  found  correct,  the  accused  was  once 
more  discharged  and  the  statute  further  amended  so  as  to  read,  "  that  no 
citizen  should  hereafter  walk  out  after  dark  without  a  lantern  and  a  candle 
in  it,  and  that  the  candle  should  be  lighted." 

The  next  night  the  same  incorrigible  and  troublesome  person  was  ayain 
brought  up  before  the  Court,  and  this  time  both  watch  and  magistrate 
thought  they  had  a  sure  thing  of  it  ;  for,  to  all  appearances,  he  had  not  on 
this  occasion  even  made  a  pretence  of  complying  with  the  law.  But  the 
triumph  of  the  officials  was  of  brief  duration,  for,  to  their  utter  disgust  and 
amazement,  the  accused  drew  from  his  capacious  coat  pocket  a  dark 
lantern,  and  showed  that  it  not  only  contained  a  candle^  but  that  the 
candle  was  lighted  and  burning.  Warned  by  this  threefold  experienee,  the 
statute  was  for  a  third  time  amended,  and  this  time  so  fully  and  clearly 
that  no  farther  practical  jokes  were  attempted,  and  the  majesty  of  the  law 
remained  unassailed. 

As  thus  told  the  above  story  is  manifestly  a  broad  burlesque,  even  in 
its  application  to  stupid  French  "  country  officials,"  and  without  further 
foundation  than  the  imagination  of  its  author.  But  it  is  nevertheless  a 
most  curious  and  amusing  circumstance  that  it  has  been  reserved  to  the 
United  States  to  furnish  out,  of  the  history  of  its  fiscal  legislation  a  record 
of  actual  experience  which,  in  many  respects,  is  the  exact  and  truthful 
counterpart  of  the  French  burlesque;  and,  as  the  incidents  involved  have 
more  than  once   (but  always  incorrectly)  been  alluded  to  on  the  floor  of 


248  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

Conpjress,  and  maybe  found  pertinent  to  prospective  legislation  and  debate 
in  respect  to  Custom  House  reforms  and  irregularities,  it  is  proposed 
to  now  embody  them  for  the  first  time,  and,  as  a  contribution  to 
economic-literature,  in  the  form  of  a  correct  and  complete  narration. 

Between  the  years  1816  and  1828,  encouraged  by  the  imposition  of  a 
low  duty  on   imported  metallic  lead,  the  manufacture  of  white  lead,  as  a 
basis  for  paints,  came  into  existence  in  the  United  States  and  developed 
with  great  rapidity,  the  principal  seats  of  the  business  being  the  cities  of 
New  York,  Philadelphia  and  Baltimore.     But  about  the  years  1826-28  the 
discovery  of  the  lead  mines  at  Galena,  111.,  became  generally  known,  and 
as  the  first  reports  were  to  the  efi'ect  that  the  deposits  were  of  such  un- 
paralleled richness,  purity,  magnitude  and  easy  accessibility  as  to  make  it 
Only  a  question  of  time  when  the  whole  world,  from  sheer  inability  to  com- 
pete, became  wholly  dependent  for  its  supplies  of  lead  on  this  one  locality, 
it  was  at  once  considered  desirable  by  many  people  to  establish,  so  far  as 
fiscal  legislation  could  do  it,  a  most  extraordinary  economic  principle,  and 
one  which  from  that  day  to  this  has  proved  popular  in  all  our  tariff  enact- 
ments ;  and  this  was  to  make  the  discovery  or  recognition  of  the  exist- 
ence of  any  great  natural  advantages — either  in  the  way  of  mines,  soils, 
climatic    advantages,  forests,    means  of   intercommunication  or   national 
characteristics — the  immediate    occasion  for  cursing  the  country  by  the 
creation    and   imposition    of  some    new  tax,  thereby  making   dear  what 
was  before  cheap,  and  endeavoring  to  work  up  to  a  state  of  abundance 
through  conditions  of  scarcity  artificially  created  and  unnecessarily  per- 
petuated.    In  this  particular  instance  the  principle  was   exemplified  by 
raising  the  duty  on  lead  imported  in  pigs    and    bars    from    one    cent  a 
pound  to  three  cents,  and  to  this  extent  increasing  to  the  consumer  the 
price  of  the  raw  material,  whether  of  foreign  or  domestic  origin,  and  of 
all   manufactured    products  in  which  lead  entered  as  the  principal  con- 
stituent.   As  the  duty  was  not  at  the  same  time  correspondingly  advanced 
on  the  import  of  white  lead,  and  as  the  lead  mining  interests  of  Galena 
were  not  prepared  to  supply  at  any  price  the  immediate    demand  thus 
artificially  created  for  their  products  in  the  domestic  market,  the  Ameri- 
can manufacturers  of  white  lead  all  at  once  found  their  business  threat- 
ened with  utter  destruction  ;  and,  with  intellects  preternaturally  sharpened 
by  a  prospeetive  loss  of  a  large  invested  capital,  they  looked  shrewdly 
about  to  see  in  what  manner  they  could  save  and  protect  themselves. 

And  putting  on  their  spectacles,  and  scrutinizing  carefully  the  entire 
tariff,  as  modified  by  the  special  Act  of  1828  referred  to,  they  soon  dis- 
covered that  the  Government,  while  effectually  closing  and  barring  up 
the  big  door  by  which    foreign    lead    could  be  imported,  had    inadvert- 


AN  EXTRAORDINARY  HISTORY.  249 

cntly  left  wide  open  a  smaller  door  beside  it,  inasmuch  as  while  Congress 
had  prescribed  a  duty  of  three  cents  per  pound  on  lead  imported  in 
pigs  and  bars,"  they  left  a  prior  duty  of  fifteen  per  cent,  ad  valorem  on 
the  import  of  old  lead,  fit  only  to  be  remanufactured,  unrepealed  and  in 
force.  Those  were  the  days  of  packet  ships  and  slow  communication 
with  the  Old  World  ;  but  we  may  readily  believe  that  no  time  was  un- 
necessarily wasted  by  those  interested  in  this  discovery  ;  and  at  the 
earliest  practicable  moment  afterwards  agents  of  nearly  every  important 
American  house  engaged  in  the  importation  of  metals — Barclay  &  Livings- 
ton, Boorman,  Johnson  &  Co.,  lloflfman.  Bend  &  Co.,  Phelps  &  Peck, 
William  Wright  &  Co.,  Asa  Fitch,  and  many  lesser  firms — were  ransack- 
ing the  markets  of  Europe  for  the  purchase  and  shipment  to  the  United 
States  of  old  lead.  Of  course,  the  legitimate  market  supplies,  never  great 
of  this  peculiar  article,  soon  gave  out,  but  the  agents  and  correspondents 
of  the  American  houses  being  Yankees,  proved  fully  equal  to  the  emer- 
gency, and  a  scheme  was  forthwith  devised  to  replenish  the  stock  by 
exchanging  new  lead  for  old,  and  contracts  in  more  than  one  instance, 
for  example,  were  actually  entered  into  and  carried  out  for  stripping 
from  extensive  factories  in  different  parts  of  England  their  old  lead  roofing 
— lead  being  then  used  more  extensively  than  now  in  the  place  of  slate 
— and  replacing  it  without  expense  to  the  owners  with  new  roofing  on 
condition  of  receiving  the  old  material. 

In  the  course  of  time  the  old  lead  thus  collected  began  to  make  its  ap- 
pearance on  this  side  of  the  Atlantic,  and  arriving  in  large  quantities — 
almost  by  the  ship  load — at  the  ports  of  New  Y^ork  and  Boston,  naturally 
attracted  the  attention  of  the  Custom  House  authorities,  who  at  first  de- 
murred to  its  entry  at  the  low  rate  of  15  per  cent,  ad  valorem.  The  matter, 
however,  being  referred  to  the  Treasury  Department  at  Washington,  an 
answer  soon  came  back  that  the  position  of  the  merchants  was  unimpeach- 
able, but  the  Department  would  have  the  law  amended  as  soon  as  possible. 

But  the  merchants  by  this  time,  in  studying  up  the  fiscal  legislation  of 
Congress  in  respect  to  lead  in  pig  and  old  lead,  had  made  another  discov- 
ery— and  that  was  that  Ihe  Tariff  Act  in  force  was  mandatory  to  this  fur- 
ther effect,  namely,  that  if  any  person  or  persons  should  import  musket 
balls  or  leaden  bullets  into  the  United  States  they  should  pay  to  the  custom 
authorities  a  duty  on  the  same  of  15  per  cent,  ad  valorerti,  and,  in  default 
thereof,  the  goods  should  be  forfeited  and  the  importers  be  punished.  Like 
good  citizens,  therefore,  the  merchantc  made  haste  to  obey  the  law,  and 
their  agents  in  Europe  being  duly  instructed,  lost  no  time  in  buying  up  all 
the  musket  balls  and  leaden  bullets  they  could  find  for  sale,  and  when  the 
foreign  markets  were  exhausted  they  had  musket  balls  of  the  regulation 


250  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

weight  and  calibre  largely  manufactured,  and  all  were  duly  shipped  as  fast 
as  possible  to  the  United  States.  Again  the  Custom  House  authorities  ob- 
jected, but  again  came  back  the  response  from  Washington  that  the  law 
was  explicit  in  respect  to  the  15  per  cent,  duty,  and  that  nothing  could  bo 
done  in  the  way  of  restraining  the  importation  of  leaden  bullets  in  place 
of  pig  lead  until  Congress  had  provided  further  legislation  on  the  subject. 

But  the  Tariff  Acts  in  force  from  1828  to  1832  were,  however,  almost  as 
much  a  mystery  and  a  muddle  of  perplexity  as  are  the  acts  under  which 
the  customs  are  at  present  administered,  and  it  was  only  after  continuous 
study  and  investigation  that  their  full  depth  of  meaning  and  of  wisdom 
could  become  evident.  But  the  success  attending  the  import  of  old  lead 
and  musket  balls  had  been  so  remarkable,  and  the  preservation  and  resuF- 
citation  of  the  "white  lead"  business  so  encouraging,  that  the  merchants 
were  stimulated  to  further  fiscal  investigations;  and  again  putting  on  their 
spectacles,  they  discovered  two  other  remarkable  provisions  of  the  then  ex- 
isting tariff  which  heretofore  had  not  been  considered  of  much  importance. 
These  provisions  related,  the  one  to  "leaden  weights"  of  all  descriptions, 
and  the  other  to  "  sounding  leads,"  and  were  to  the  effect  that  if  any  per- 
son imported  any  of  these  articles  into  the  United  States  he  should  pay  on 
the  same  a  duty  of  15  per  cent,  ad  valorem. 

It  seems  almost  unnecessary  to  relate  in  detail  the  consequence  of  these 
discoveries,  but  it  sufficeth  to  say  that  those  were  the  good  old  days  when 
false  standards  were  far  more  of  an  abomination  than  they  now  are,  and  it 
was  astonishing  how  great  a  demand  all  at  once  appeared  t^o  have  been 
created  in  the  United  States  for  full,  fresh,  and  new  sets  of  leaden  weights 
(from  half  an  ounce  to  fifty-six  pounds  and  upwards,  but  notably  of  the 
heavier  denominations),  which  had  not  had  their  accuracy  impaired  by 
continuous  use  and  abrasion.  If  the  exact  truth,  moreover,  could  now  be 
known,  it  might  also  appear  that  many  persons  at  that  time  (especially  in 
the  cities  of  New  York  and  Boston)  had  somehow  become  indoctrinated 
with  the  idea  that  the  possession  of  more  "  weights  "  would  in  some  way 
increase  the  quantity  of  things  to  be  weighed — in  the  same  way  as  the 
progressive  men  of  the  present  day  have  brought  themselves  to  believe 
that  the  possession  of  more  paper  money  will  increase  the  value  and  quan- 
tity of  the  things  that  this  same  money  can  buy.  Those  were  the  days, 
also,  when  clocks  were  high  and  stood  in  corners  rather  than  upon  mantels, 
and  were  moved  by  weights  rather  than  by  springs,  and  our  ancestors  of 
forty  years  ago — and  none  knew  better  than  they  that  "  timcis  money" — 
all  at  once  seemed  possessed  with  the  desire  to  have  more  clocks,  for  the 
import  of  heavy  leaden  clock  weights,  with  iron  hooks  neatly  fitted  to  one 
end,  and  vf\\\Q\\,  prima  facie,  could  be  only  used  for  the  manufacture  of 


AN  EXTRAORDINARY  HISTORY.  251 

clocks,  all  at  once  increased   and   rapidly  became  a  business  of  magni- 
tude. 

Navigators,  also,  about  this  time,  it  might  be  inferred,  became  more  intel- 
ligent ;  or,  if  not  more  intelligent,  then,  through  a  desire  to  save  their 
insurance  premiums,  more  cautious  ;  or,  if  not  these,  then  the  desire  of 
American  geographical  students  to  stud}^  more  accurately  the  sea  bottom, 
migiit  have  been  abnormally  stimulated;  for  in  what  other  way  could  an 
excessive  and  unusual  import  of  deep  sea  sounding  leads  be  accounted 
for?  leads  small,  leads  large,  leads  of  two  ounces  weight,  leads  of  seventy 
pounds  weight,  leads  a  few  inches  in  length  up  to  leads  two  feet  in  length 
— all  with  an  eyelet  at  one  end  for  the  sounding  line  attachment,  and  a  cav- 
ity at  the  other  for  the  reception  of  the  tallow,  by  the  agency  of  which 
specimens  were  to  be  brought  up  from  the  sea  bottom. 

But  the  Custom  Hou.se  authorities  were  practical  men.  They  indulged 
in  no  philosophical  reflections  as  to  any  abstract  possible  uses  of  the 
imported  articles  in  question.  They  saw  in  all  of  them  lead  and  lead  only 
— and  on  lead,  in  the  interests  of  the  Galena  mines  and  of  the  revenue, 
they  wanted  a  duty  of  three  cents  per  pound.  They  accordingly,  as 
opportunity  offered,  seized  and  refused  to  deliver  the  exceptionally  large 
invoice  of  "clock  weights,''  "scale  weights"  and  "sounding  leads,"  and 
the  appeal,  as  usual,  from  their  proceedings  went  up  from  the  merchants 
to  Washington.  But  if  the  Custom  House  officials  were  practical  men,  the 
Treasury  magnates  at  the  capital,  on  the  other  hand,  were  strict  construc- 
tionists, and  as  they  found  the  statute  written  so  they  interpreted  it ;  and 
in  all  cases  the  arrested  importations  of  the  merchants  were,  after  a  little 
delay,  restored  and  admitted  to  entry;  and  in  at  least  one  case,  where 
tliree  cents  per  pound  had  been  paid  under  protest  on  the  above  men- 
tioned leaden  articles,  the  difference  between  that  sum  and  fifteen  per  cent, 
was  returned  to  the  merchant  by  the  Treasury.  In  fact,  "  as  sea  stores  " 
of  all  descriptions  were  then  on  the  free  list,  "sounding  leads"  might  have 
been  claimed  to  be  exempt  from  all  imposts  ;  but  the  merchants  were  gen- 
erous, and  this  question  does  not  appear  to  have  been  raised. 

*It  is  not  to  be  denied,  nevertheless,  that  by  this  time  lead  had  got  to 
be  a  very  irritating  topic  to  a  Federal  official;  and,  indeed,  it  was  only 
necessary  to  say  "  lead  "  to  a  United  States  district  attorney,  a  collector  or 
revenue  inspector,  to  seriously  disturb  his  mental  equanimity.  An  oppor- 
tunity to  retaliate  upon  their  mercantile  tormentors  was,  therefore,  earn- 
estly sought  for,  and  before  long  such  an  opportunity  seemed  to  present 
itself.  A  prominent  New  York  house  in  the  metal  trade,  which,  in  connec- 
tion with  some  half  dozen  or  more  leading  firms,  had  been  engaged  in 
importing  old  lead,  musket  bullets,  sounding  leads,  clock  weights,  and  the 


252  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

like,  and  passing  them,  under  a  strict  but  legal  construction  of  the  stat- 
ute, at  fifteen  per  cent,  ad  valorem,  imported  on  one  occasion,  during  the 
period  under  consideration  but  subsequent  to  the  events  narrated,  an 
invoice  of  stereotype  metal.  Now,  stereotype  metal  was  then  on  the  free 
list  of  the  tariff,  and  subject  to  no  duty,  and  in  this  particular  instance  the 
importation  had  been  made  in  consequence  of  a  direct  order  received  from 
one  of  the  largest  type  founders  in  New  York;  but,  as  it  came  in  pigs  or 
bars,  was  in  unusual  quantity,  and  consisted  merely  of  lead  mixed  with 
comparatively  small  proportions  of  antimony  and  bismuth,  the  Custom 
House  officials  conceived  the  idea  tliat  it  was  only  a  new  device  of  the 
enemy  to  take  advantage  of  the  faulty  statute,  and  that  the  ultimate 
intent  was  to  remelt  the  stereotype  metal,  separate  its  several  constituents, 
and  then  dispose  of  the  lead  independently.  The  whole  invoice  was 
accordingly  seized,  and  suit  commenced  in  the  United  States  District  Court 
for  its  forfeiture,  the  Government  having  previously  ascertained,  by  means 
of  an  analysis  of  a  sample  bar,  made  at  their  request  by  the  then  famous 
New  York  chemist,  old  Dr.  Chilton,  that  the  metal  contained  somewhat 
more  than  eighty  per  cent,  of  lead.  The  District  Attorney  at  that  tim ) 
was  Price,  afterwards  best  known  for  some  financial  irregularities.  The 
merchants,  of  course,  resisted,  and  on  the  day  of  trial  appeared  in  court 
with  the  type  founder  on  whose  account  the  metal  was  ordered,  and  other 
experts,  to  prove  that  the  import  and  prospective  use  of  the  metal  were 
entirely  legitimate.  The  Government  opened  their  case  by  stating  their 
assumption  that  the  metal  was  not  imported  for  the  manufacture  of  stereo- 
types but  for  the  purpose  of  defrauding  the  revenue,  and,  calling  as  their 
first  witness  Dr.  Chilton,  examined  him  somewhat  as  follows  : 

^'District  Attorney. — What  is  your  profession  ?     Dr.  Chilton. — A  chemist. 

Q.  Where  were  you  educated?  A.  In  Edinburgh,  and  have  followed 
for  many  years  my  profession  in  New  York. 

Q.  Have  you  made  an  analysis  of  this  imported  metal  (at  the  same  time 
referring  to  one  of  the  bars  included  in  the  invoice)  ?     A.  I  have. 

Q.  Of  what  does  it  consist?  A.  Of  some  eighty  per  cent,  of  lead  ;  the 
remainder,  antimony,  bismuth  and  tin. 

Q.  Is  it  possible  to  separate  these  several  constituents,  as  thus  mixed, 
so  as  to  use  and  sell  them  separately  ?     A.  Perfectly  so. 

Q.  Please  tell  the  Court  what,  in  your  opinion,  would  be  about  the 
expense  of  the  operation.  A.  Rather  more  than  all  the  materials  are 
worth." 

There  was  silence  for  a  few  moments.  The  District  Attorney  did  not 
seem  to  be  possessed  of  a  further  inquiring  spirit.  It  was  a  warm  sum- 
mer's day,  and  the  Judge  (Betts),  after  mopping  his  face  with  his  hand- 


AN  EXTRAORDINARY  HISTORY.  253 

kercliicf,  stretched  his  liead  forward,  and  somewliat  brusquely  asked  if  Mr. 
Price  had  any  rebutting  testimony,  and,  on  receiving  a  negative  reply,  fell 
back  in  his  chair  with  the  remark,  "Then  the  case  had  better  be  dis- 
missed."   And  dismissed  it  was. 

But  the  troubles  of  the  Custom  House  oflBcials  were  not  yet  ended  ;  and 
here  comes  in  that  portion  of  this  curious  series  of  events  which  is  best 
known  to  the  public,  is  the  most  comical,  and  which,  as  has  already  been 
remarked,  is  often  referred  to  in  Congressional  debates,  when  topics  of  the 
tariffs,  smuggling,  or  under  valuations  are  under  consideration. 

The  wicked  merchants,  encouraged  by  their  complete  success  as  law 
interpreters,  had  continued  their  tariff  investigations,  and  had  further 
found  among  its  provisions  in  force  one  to  the  effect  that  "metal  statuary 
and  busts  "  might  be  imported  free  of  duty.  It  was  thereupon  immedi- 
ately determined  by  the  merchants  that  if  the  American  people  desirrd  to 
cultivate  their  taste,  or  keep  alive  the  memory  of  the  good  and  great  of 
former  days  by  adorning  their  houses  and  grounds  with  metal  statuary, 
they  ought  to  have  the  opportunity  of  so  doing  ;  and,  accordingly,  large 
orders  were  sent  to  Europe — at  that  time  the  exclusive  seat  of  high  art — 
for  the  manufacture  of  busts — mainly  colossal — of  Wa!?hington,  Lafayette, 
Napoleon,  Moses  and  the  prophets,  and  not  forgetting,  also,  duplicates  or 
reproductions  of  the  great  works  of  antiquity  ;  and  as  lead,  of  all  the  met- 
als, seemed  to  possess  in  the  highest  degree  the  qualities  of  durability  ten- 
acity, cheapness  and  facility  of  being  moulded,  the  statuary  in  question 
was  directed  to  be  made  of  lead.  It  should  also  be  remarked  in  this  con- 
nection that  lead  statuary  fifty  years  ago  was  not  the  abnormal,  exceptional 
thing  it  now  is.  In  fact  it  was  then  the  common  material  for  cheap 
imagery  throughout  Europe,  when  something  less  expensive  than  bronze 
or  marble  was  desired,  and  filled  the  place  which  is  now  supplied  by  cast 
iron  and  zinc,  but  which  materials  fifty  years  ago  were  not  thought  suscep- 
tible of  ornamental  adaptation.  And  that  the  lead  statuary  in  question 
was  really  ornamental  is  proved  by  the  circumstance  that  some  of  it  thus 
imported  is  yet  in  use  for  ornamental  purposes,  one  piece  embellishing  at 
the  present  time  the  garden  of  an  eminent  banker,  William  Butler  Duncan, 
on  Fifth  avenue.  From  such  an  aesthetic  point  of  view,  also,  did  the  pro- 
saic Custom  House  officers  regard  the  first  importations  of  these  leaden 
images,  and  so  migiit  they  long  have  continued  to  regard  them,  had  the 
persons  in  Europe  entrusted  with  their  shipment  been  more  careful  in 
respect  to  packing.  But  when  Washington  came  up  out  of  the  hold  of  the 
vessel  after  a  rough  voyage  with  his  nose  punched  in,  and  Napoleon  with 
his  eyes  sufficiently  askew  to  require  an  operation  for  strabismus,  and 
Moses  looking  very  much  like  a  subject  on  whom  the  law  ought  to  be 


254  CONGRESS  AND  PHELPS,  DODGE  &  CO. 

administered  rather  than  an  author  and  administrator  of  the  law,  suspi- 
cion was  naturally  excited,  and  forthwith  the  statuary  was  seized  and  held 
for  forfeiture  by  tlie  customs  authorities.  In  answer,  the  importers,  as 
before,  pointed  to  the  clear  and  explicit  provision  of  the  tariff  then  in  force 
— "Afetal  statuary  and  busts  free" — and  urj^ed  the  Government,  if  they 
doubted,  to  institute  a  suit.  But  Mr.  Price,  the  district  attorney,  had  once 
burned  his  fingers  with  cold  lead,  and  persistently  refused  to  bring  the  mat- 
ter into  court.  Thereupon  one  of  New  York's  then  best  known  merchants 
and  publicists,  David  Leavitt,  Esq.,  caused  an  invoice  of  the  questionable 
statuary  to  be  imported  into  Boston,  and  arranged  with  the  district  attor- 
ney of  that  port  to  try  the  issue  in  respect  to  its  dutiable  character. 
When  the  trial  came  on  Daniel  Webster  appeared  as  counsel  for  the 
defence.  His  speech  in  answer  to  Government  was  very  brief,  but  to  the 
point,  claiming  the  law  provided  for  the  admission  of  metal  statuary,  busts, 
etc.,  free,  with  no  limit  as  to  the  kind  or  quantity,  and  that  the  imports  in 
question  were  metal  statuary,  though  made  of  lead.  When  the  case 
closed  Mr.  Webster  requested  the  Judge  to  charge  the  jury  that  they  were 
to  decide  whether  the  articles  were  metal  statuary,  and  if  they  found  that 
they  were,  they  must  bring  in  a  verdict  for  the  defendants.  The  Judge 
substantially  did  as  requested,  and  the  jury,  in  a  few  minutes  after  retir- 
ing, returned  with  a  verdict  for  Mr.  Leavitt. 

The  decision  in  this  case  practically  put  an  end  to  the  whole  contro- 
versy. The  lead  statuary  under  seizure  was  released,  the  import  was 
allowed  to  go  on  unrestricted,  and,  as  soon  as  circumstances  permitted, 
Congress  amended  the  tariff  by  equalizing  the  duties  on  all  forms  of  lead, 
and  at  the  same  time  satisfied  the  white  lead  manufacturing  interest  by 
fully  protecting  their  products  from  foreign  competition. 

As  this  curious  story  has  been  heretofore  told,  the  importation  of  the 
leaden  statuary  has  been  popularly  attributed  to  the  agency  of  the  well 
known  New  York  firm  of  Phelps,  Dodge  &  Co.  This  is,  however,  an  error. 
The  firm  of  Phelps,  Dodge  &  Co.  was  not  at  the  time  of  the  occurrence  of 
these  events  in  existence  ;  and  the  old  firm  that  preceded  them — namely, 
that  of  Phelps  &  Peck — although  large  importers  of  metals,  were  not  con- 
cerned in  this  matter  of  the  leaden  images ;  Hon.  W.  E.  Dodge,  subse- 
quently the  senior  of  Phelps,  Dodge  &  Co.,  being  then  engaged  in  the  busi- 
ness of  dry  goods  jobbing  and  importation,  while  Mr.  James,  senior  (now  of 
Liverpool),  was  a  resident  of  New  York,  engaged  in  the  wholesale  grocery 
business. 

The  credit  of  originating  the  idea  of  importing  lead  in  the  form  of  busts 
and  statuary  was  undoubtedly  due,  in  the  first  instance,  to  Asa  Fitch, 
Esq.,  who,  prior  to  engaging  in  mercantile  pursuits  in   New  York,   had 


AN  EXTRAORDINARY  HISTORY.  255 

served  for  a  number  of  years  as  American  consul  at  one  of  the  ports  of 
France,  wliere  tlie  extensive  use  at  that  time  made  in  France  of  lead  for 
statuary  and  other  ornamental  purposes,  had,  doubtless,  become  to  him 
familiar  and  su^rgestive.  Subsequently  Mr.  Leavitt,  as  well  as  other  New 
York  merchants,  extensively  availed  themselves  of  the  same  expedient. 

It  would  be  a  mistake,  furthermore,  to  infer  that  like  muddles  and  per- 
plexities cease  to  characterize  the  tnrifT,  when  Congress,  taught  by  experi- 
ence, successively  remedied  the  omissions  and  commissions  of  the  Act  of 
182j<.  On  the  contrary,  there  has  been  hardly  a  tariflf  enacted  since  that 
time  which  has  not  the  absurdities  of  the  old  lead,  the  musket  balls,  the 
clock  weights,  the  deep  sea  leads,  and  the  leaden  images  in  some  form  re- 
peated. Thus,  for  example,  in  the  tariff  of  184G  a  duty  was  imposed  on 
flaxseed  of  twenty  per  cent.,  but  in  the  tariff  of  1857  linseed  was  made  free 
while  flaxseed  was  charged  fifteen  per  cent.  duty.  As  might  have  been 
expected,  the  import  of  linseed  was  always  large,  and  that  of  flaxseed 
always  very  small. 

Again,  in  1864,  the  manufacturers  of  spool  thread,  anxious  to  shield 
themselves  against  all  foreign  competition,  obtained  a  prohibitory  duty  on 
the  import  of  unwound  cotton  tiiread  or  yarn.  When  the  law  went  into 
effect  it  was  found  that  the  result  of  the  new  duty  would  be  the  destruc- 
tion of  the  manufacture  of  fine  elastic  fabrics,  suspenders,  gaiters,  etc.,  as 
we.l  as  of  certain  worsted  fabrics,  which  were  dependent  on  Europe  for 
certain  qualities  of  warp  yarns  not  then  manufactured  on  this  side  of  the 
Atlantic.  The  difficulty  was,  however,  got  over  by  an  absurd  Treasury 
ruling  that  cotton  warp  or  yarn,  intended  for  use  in  the  manufacture  of 
elastic  worsted  or  woollen  fabrics,  was  not  unwound  thread  or  yarn,  but  a 
manufacture  of  cotton  "not  otherwise  provided  for." 

Another  example  of  customs  romance  of  a  prior  date  was  that  of  a  man- 
ufacturer of  New  England,  who,  finding  the  growth  and  development  of  his 
business  of  making  "cloth  covered  buttons"  seriously  interfered  with  by 
the  almost  prohibitory  duties  levied  on  the  importation  of  foreign  silk, 
worsted  and  other  suitable  fabrics,  resorted  to  the  expedient  of  importing 
such  fabrics  free,  or  at  a  nominal  duty,  in  the  form  of  raga,  i.  e.,  irregular 
strips  and  cuttings;  to  which  form  it  would  have  been  necessary  to  reduce 
the  fabrics  intended  for  button  covering,  even  when  imported  in  the  piece. 

And,  coming  down  still  later.  Congress,  in  1872,  enacted  a  general  re- 
duction* of  10  per  cent,  in  tariff  rates  on  metals  and  manufacture  of  metals 
— watches  and  jewelry  excepted.  It  is  clear,  however,  that  "  watch  cases  " 
are  not  "  watches,"  and  neither  are  springs,  escapements,  wheels,  etc.,  etc., 
considered  separately.  The  course  of  trade,  therefore,  in  respect  to  im- 
ported watches,  soon  adjusted  itself  as  follows  :  The  movements  taken  out 


256 


CONGRESS  AND  PHELPS,  DODGE  &   CO. 


of  the  cases,  packed  in  separate  cartons,  but  carefully  numbered,  are,  when 
thus  imported,  clearly  manufactures  of  metals,  and  as  such  entitled  to  the 
rebate  of  10  per  cent.  In  like  manner  the  cases,  without  the  essentials  of 
a  watch  in  them,  are  nothing  but  manufactures  of  metal  (gold  and  silver), 
and  must  be  also  thus  treated  in  respect  of  duty.  Watches,  of  course, 
when  they  come  in  as  watches,  pay  full  duty  !  !  ! 

Thus  the  old,  old  story  of  the  efifect  of  impolitic  and  absurd  restrictions  on 
trade  and  commerce,  the  lesson  of  which  Europe  throujxh  centuries  of  ex- 
perience learned  and  profited  by,  continues  to  repeat  itself  in  the  liscal 
policy  of  the  United  States.  Let  us  hope  that  the  result  here,  too,  at  no 
distant  day  will  be  what  it  has  been  elsewhere,  namely,  to  force  men  to 
the  conclusion  that  the  best  system  of  taxation  is  to  tax  but  a  few  things, 
and  then  leave  those  taxes  to  diffuse,  and  adjust,  and  apportion  themselves 
by  the  inflexible  laws  of  trade  and  political  economy — and,  furthermore,  to 
recognize  that  no  system  of  government  has  any  just  claim  to  the  title  of 
free  which  arbitrarily  takes  from  its  citizens  any  portion  of  their  property 
except  to  defray  the  State's  necessary  expenditures. 


TESTIMONY    OF   THE    COLLECTOR    OF    NEW    YORK    AT   THE    TIME    OF   THE    LEADEN 
STATUARY    IMPORTATION. 

It  is  interesting  to  note  in  this  connection  the  following  testimony  of  the 
Collector  of  the  Port  of  New  York  at  the  time  tbe  anomalous  importations, 
alluded  to  in  the  above  article,  occurred  : 


We  were,  says  the  New  York  Express  (July, 
1 874),  on  Saturday  afternoon,  favored  by  an 
interview  with  the  Collector  of  the  Port  of 
New  York  when  Gen.  Jackson  was  President, 
and  under  whom  the  lead  statutes,  over  which 
Gen.  Butler  became  so  violent,  were  imported 
free  ol'duty. 

It  was  exceedingly  agreeable  to  listen  to  the 
intelligent  and  explicit  statement  of  the  his- 
torj'  of  that  amusing  transactitm,  in  which 
the  present  firm  of  Plielps,  Dodge  &  Co.,  nor 
the  preceding  firm,  nor  any  of  the  members 
of  either  of  them,  were  not  in  anywise  directly 
or  indirectly  connected.  Says  the  old  Jack- 
sonian  Collector : 

"  It  was  another  party,  whose  name  we  could 
give,  if  required,  who  ludicrously  figured  m 
that  business  of  the  importation  of  the  busts 
of  Washington,  Franklin,  Jefferson,  Adams, 
and  numerous  well  known,  and,  at  that  day, 
reverenced  patriots.  " 


The  Collector,  at  the  time,  says  he  objected 
to  the  then  sudden  burst  of  patriotism,  as 
manifested  by  the  increased  demand  for  busts 
of  the  revolutionary  patriots,  but  was  over- 
ruled by  the  then  Secretary  of  the  Treas- 
ury. 

This  serio-comic  story  of  the  importJition  of 
leaden  statues  by  Gen.  Butler,  as  applied  to 
any  of  the  past  or  present  firm  of  Phelps, 
Dodge  &  Co.,  is,  we  are  authorized  by  the  old 
Collector  to  state,  wholly  unfounded  in  truth, 
and  that,  during  his  whole  term  of  office  under 
President  Jackson,  no  firm  enjoyed  a  more 
honorable  and  enviable  reputation  in  its  deal- 
ings with  the  Custom  House  than  the  then 
firm,  now  Phelps,  Dodge  &  Co. 

At  the  time  of  these  lead  bust  importations 
Mr.  Wm  E.  Dodge,  says  the  Collector,  was  a 
young  man  filling  the  modest  position  of  a 
clerk,  not  a  member  of  any  firm. 


COMMENTS  OF  THE  PRESS. 

As  might  have  been  expected,  the  extraordinary  debate  in  the  House  of 
Representatives  initiated  by  General  Butler,  a  very  full  report  of  which 


AN  EXTRAORDINARY  HISTORY. 


257 


(copied  from  the  columns  of  the  Congressional  Record)  has  been  herewith 
given,  excited  much  attention  througliout  the  country,  together  with  a 
feeling  of  general  regret  and  disgust  that  any  circumstances  should  have 
made  it  permistrible  lor  the  chief  actor  to  have  so  conspicuously  occupied 
one  of  the  national  halls  of  legislation  for  the  purpose  of  gratifying  his  per- 
sonaj  animosities  and  serving  clients  whose  conduct  both  Houses  of  Con- 
gress had  previously  declared  disgraceful.  The  following  extracts  from 
the  leading'newspapers  of  the  country  are  a  most  striking  testimony  of  the 
state  of  public  opinion  at  that  time,  both  in  regard  to  General  Butler  and 
the  persons  whom  it  was  his  chief  object  to  injure  and  defame  : 


THE  CASE  OF  PHELPS,  DODGE  &  CO.  AND  THEIR  ASSAILANT,  GENERAL 

BUTLER. 


[Frwn  the  N.  Y.  Express,  June  27th,  1874.] 
The  bettor  portion  of  the  American  public 
are  touched  with  a  feeUng  both  of  indigna- 
tion and  mortilication  at  the  recent  language 
of  Gen.  Butler,  M.  C,  from  Massachusetts,  in 
the  U.  S.  House  of  Representatives,  in  con- 
nection with  tlie  alleged  practices  of  the 
leading  commercial  house  of  this  country. 
Not  only  was  the  good  name  of  this  tiuje 
honored  house  assailed,  but  the  private  char- 
acter of  the  senior  partner  of  the  tirm,  Wil- 
liam E.  Dodge,  Esq.,  was  most  wantonly 
libelled,  under  the  known  protection  of  non- 
responsibilitj'  for  words  spoken  in  debate  in 
the  House.  Had  the  language  of  Gen.  Butler 
been  uttered  in  any  Police  Court,  even  the 
lowest,  it  would  have  been  promptly  rebuked. 
It  was  used  ad  iibitum,  without  one  word  of 
disapprobation  from  the  presiding  office.  Not 
only  tlie  motives  of  the  tirm,  but  even  the  re- 
ligion of  its  individual  members,  were  both 
maligned  and  sfcibbed  in  an  American  Con- 
gress, and  the  lifetime  good  name  misrepre- 
sented and  most  wickedly  criticised. 

Christianity,  truth  and  decency  thus  be- 
ing set  at  defiance,  alike  CiiU  for  severe  re- 
buke for  such  a  prostitution  of  the  liberties 
of  debate  by  a  representative  in  Congress. 
Every  minister  of  the  Gospel  and  teacher  in 
America  should  feel  indignant  at  the  charac- 
teristic sneers  at  the  followers  and  believers 
in  the  truths  of  the  Saviour. 

Certainly  our  forefathers  did  not  intend  to 
protect  any  such  freedom  of  debate  in  Con- 
gress, nor  is  it  in  the  true  spirit  of  the  Con- 
stitution. "We  mistake  the  spirit  of  Chris- 
tianity in  America  if  the  stabs  of  Gen.  Butler 
are  not  hurled  back  with  redoubled  indigna- 
tion. The  pulpit  and  the  press  alike  should 
give  a  general  denunciation  of  such  slander- 
ous language  in  the  House  of  Representa- 


tives by  one  of  its  members,  under  the  as- 
sumed protection  of  non-responsibility  for 
words  six)ken  in  debate. 

All  of  this  was  an  attempted  denial  of  the 
truth  of  the  report  of  the  Si)ecial  Committee 
of  the  House  of  Representiitives  on  all  and 
singular  {is  to  the  alleged  teclmical  under 
valuation  of  goods  by  this  tirm,  as  to  the 
constructive  loss  to  the  Government  of 
$1,600,  in  a  business  that  exceeded  $40,000,- 
000  of  importations  during  tlie  last  five  years. 

While  the  capital  and  enterprise  of  this 
house  have  added  miUions  of  gold  annimlly 
to  the  Treasury,  in  the  shape  of  paid  duties, 
to  the  great  advantage  of  the  credit  of  the 
country,  yet  because  hired  informers,  without 
character  or  responsibility,  after  an  arbitrary 
seizure  of  the  books  and  paijers,  and  the  use 
of  corrupted  clerks,  had  made  out  a  technical 
loss  to  the  Government  of  $1,600,  this  world- 
wide house  of  established  integrity  and  hon- 
orable fair  dealing  was  systematically  as- 
sailed and  mulcted  out  of  nearly  $300,000  in 
the  name  of  the  Government,  to  be  subdi- 
vided mainly  among  informers  and  Govern- 
ment officials  under  the  advice  and  sanction 
of  Gen.  Butler,  as  coiuisel  for  the  prosecu- 
tion, and  while  a  member  of  Congress. 

The  guilty  officials  having  failed  to  sub- 
stantiate their  allegations  before  a  disinter- 
ested committee  of  the  House,  and  a  report 
having  been  made  in  full  corroboration  of  the 
uniform  statements  of  Phelps,  Dodge  &  Co., 
and  tlie  matter  virtually  closed,  the  whole 
original,  exaggerated  and  unfounded  allega- 
tions, are  again  spread  before  the  public, 
through  the  defeated  counsel  of  these  in- 
formers, and  under  the  protection  of  being  a 
member  of  Congress. 

These  assaults  on  the  floor  of  the  House 
are  statements  which  we  have  repeatedly  re- 


17 


258 


CONGRESS  AND  PHELPS,  DODGE  &   CO. 


futed  and  rebuked.  Indeed,  all  the  insinua- 
tions and  allegations  of  the  past  made  against 
the  business  standing  and  transactions  of 
Phelps,  Dodge  &  Co.  have  fallen  to  the 
ground.  We  now  give  to  the  public  the  com- 
plete refutJition  of  tlie  last  stab  of  Gen. 
Butler,  after  the  verdict  of  the  Special  Com- 
mittee had  been  rendered  against  liim.  This 
last  wanton  attack  upon  private  cliaracter  ex- 
hibits, in  its  most  hideous  and  wicked  aspect, 
the  spirit  that  has  characterized  the  black  mail- 
ing of  one  of  our  most  responsible  and  honora- 
ble American  commercial  houses,  and  fully 
justifies  the  strongest  language  of  condemna- 
tion that  can  possibly  be  expressed. 


[From  the  N.  Y.  World,  June  20th,  1874.] 

No  one  can  beat  Butler  in  two  things,  viz., 
in  soundly  thrashing  the  subject  in  hand  des- 
tined for  abuse;  and,  secondly,  in  repartee; 
but  in  this  case  his  powers  served  him  to  lit- 
tle purpose,  for  at  no  time  during  his  event- 
lul  career  d^d  this  master  of  abuse  get  so  ter- 
ribly damaged  and  punished.  BiiJ  it  may  be 
readily  imagined  that  the  hero  of  Fort  Fisher 
was  not  a  little  astonished  to  hear  himself 
accused  by  Foster,  of  Oliio,  as  a  receiver  of 
stolen  letters  and  a  stealer  of  telegrams,  to 
say  nothing  of  the  spoons  allusion,  or  the 
reading  of  Jayne's  statement  that  Butler  was 
liis  lawyer  and  feed  by  moieties ;  nor  did  he 
escape  a  scorching  about  the  Sanborn  swindle. 
But  the  unkindest  cut  of  all  was  when  the 
diminutive  Roberts,  of  New  York,  assumed 
the  stature  of  a  giant,  and  in  the  most  con- 
temptuous manner  charged  Butler  with  cow- 
ardice for  not  coming  into  court  when  he  was 
wanted.  "  You  pleaded  weakness  like  a  sick 
girl,  and  called  out.  *  Titinius,  give  me  drink  '  " 
It  took  all  Butler's  audacity  and  the  display 
of  all  his  wonderful  readiness  of  repartee  to 
get  himself  out  of  the  hall  not  the  worst  drub- 
bed man  in  the  country. 

It  is  universally  admitted  that  Butler  made 
a  blunder  in  not  holding  his  tongue ;  for  the 
very  object  he  had  in  view  is  frustrated  by  his 
own  intemperate  attack.  His  aim  was  to  an- 
nihilate Phelps,  Dodge  &  Co.,  and,  as  far  as  the 
House  is  concerned,  every  member  except 
Butler  feels  great  sympathy  for  the  attacked 
lirm,  and  the  papers  just  come  to  hand  evince 
the  same  sympathy.  It  has  been  shrewdly 
suggested  to-day  that  Butler  was  obliged  to 
make  the  attack.  It  is  said  that,  as  Bout- 
well,  Richardson  and  Dawes  sold  themselves 
to  Butler,  so  Butler  sold  himself  to  his  rays- 
tic  and  dark  majesty,  Jayne.  It  was  Jayne 
who  ordered  last  night's  farce  and  made  But- 


ler deliver  the  speech  he  has  had  in  his  port- 
folio  these  eight  weeks.  Indeed,  all  the  points 
were  old  and  blunted  b}-^  age.  The  abuse 
alone,  which  is  of  the  Butlerian  fragrancy, 
was  fresh.  It  is  noteworthy,  too,  that  Butler 
went  for  the  scalps  not  only  of  Thelps.  Dodge 
&  Co.  but  for  those  of  Republican  members. 
He  was  gratuitously  and  liberally  polite  to 
the  Democratic  party  as  a  p-rty,  prophesying 
its  speedy  return  to  power.  Then,  and  only 
then  would  he  submit  to  a  voluntary  investi- 
gation. Truly  Mr.  Butler  seems  to  forget 
that  the  mission  of  the  Democratic  party  is  to 
purify  the  land  from  the  putrescence  in 
which  he  and  his  have  soaked  it,  to  undo 
what  they  have  done,  and  not  to  waste  time 
investigating  the  like  of  Butler. 


BUTLER  ANSWERED. 


[Ft'om  th£  Boston  Post,  Jufie  29th,  1874.] 

Tlie  odious  personalities  and  the  evident 
malice  of  Gen.  Butlers  supplementary  speech 
on  the  Moieties  Bill  render  any  response  un- 
necessary. His  remarks  carry  their  own  con- 
demnation. But  upon  the  question  of  facts 
involved,  Messrs.  Phelps,  Dodge  &  Co.  furnish 
in  a  card  which  we  print  elsewhere  a  refuta- 
tion of  the  monstrous  charges  on  which  But- 
ler based  his  infamous  abuse  of  that  firm. 
In  this  reply  Butler's  accusatious  are  taken 
up  categorically. 

This  explicit  denial  of  the  facts  on  which 
Butler  founded  his  tirade  at  once  deprives 
that  offensive  and  miseemly  exhibition  of  all 
excuse.  But,  aside  from  any  consideration  of 
decency,  this  assault  upon  an  old  and  honora- 
ble house  has  a  yet  blacker  aspect,  in  view  o 
the  fact  that  Butler  could  hardly  have  been 
ignorant  of  the  falsity  of  the  charges  which 
he  brought.  Witli  regard  to  the  lead  statue 
cases,  the}'  and  the  persons  concerned  in  that 
evasion  of  duty  have  been  notorious ;  and  it 
is  inconceivable  that  the  paid  attorney  of 
Jayne,  who  must  have  had  every  opportunity 
of  information  about  the  extent  of  the  alleged 
frauds  in  invoices,  could  bo  so  deceived  as  to 
the  character  and  amount  of  the  errors  dis- 
covered. The  time  and  circumstances  of  But- 
ler's speech  confirm  the  impression.  It  was 
made  at  the  close  of  the  session,  after  the  re- 
peal of  the  law,  when  no  correction  could  be 
made  by  the  accused  merchants  before  the 
adjournment  of  Congress,  and  when  no  op- 
portunity remained  for  an  investigation  into 
the  slanders  upon  Secretary  Fessenden's  mem- 
ory. It  was  practically  useless,  and  ineffec- 
tive in  any  way  except  as  it  offered  reUef  to 


AN  EXTRAORDINARY  HISTORY. 


259 


the  spite  of  one  who  had  seen  a  profitable 
cUent  suddenly  retired  from  business  at  a 
time  when  tlie  prospect  of  great  cases  and  fat 
fees  was  never  better.  Tlie  speech  was  in 
every  part  so  consistentlj'  a  special  plea  for 
Jayne's  extortions  as  to  give  new  color  to  Mr. 
Foster's  statement  that  Butlers  zeal  on  the 
floor  of  tlie  House  was  the  zeal  of  paid  coun- 
sel. The  manly,  indignant  refutation  now 
furnished  by  Messrs.  Phelps,  Dodge  &  Co. 
finishes  the  characterization  of  this  extraor- ! 
dinary  exhibition. 


loiis  character  as  a  controversialist  is  too  wel 
known  foi  the  public  to  expect  anything  bet- 
ter of  him.  The  otlier  portions  of  his  bitter 
speech  have  no  better  foundation  in  fact. 
The  card  from  the  house  in  question  is  a 
complete  refuUitiou  of  his  slanderous  imputa- 
tions. 


[From  the  Boston  Daily  Globb,  Jali/  29/A,  1874.] 

The  reply  of  Phelps,  Dodge  &  Co.  to  the 
charges  of  Gen.  Butler,  in  his  recent  Congres- 
sional speech,  is  as  vigorous  as  it  is  conclu- 
sive. It  used  to  be  sjiid  of  Daniel  "Webster 
that  his  statements  were  arguments,  but  the 
statements  of  Phelps,  Dodge  &  Co.  are  so  co- 
gent as  to  amount  to  absolute  proof.  Their 
simple  record  of  facts  disposes  of  the  charge 
of  evading  duties  by  nnjwrting  lead  as  statu- 
ary, by  showing,  as  we  have  before  stated, 
that  these  things  were  done  not  only  before 
the  firm  came  into  existence,  but  before  any 
one  of  its  present  or  late  members  became 
connected  with  the  metal  importing  business. 
The  accusation  that,  by  changing  the  posi- 
tion of  a  comma  in  the  tariff  Act  of  April, 
1864,  they  were  enabled  to  clear  $2,250,000, 
is  refuted  by  the  views  and  action  of  Mr. 
Fessenden,  then  Secretary  of  the  Treasur}', 
showing  that  their  cokirse  was  highly  honora- 
ble throughout  this  whole  matter.  As  to  the 
alleged  frauds  in  their  other  invoices,  Phelps, 
Dodge  &  Co.  not  only  convict  Gen.  Butler  of 
glaring  falsificjitions,  but  of  a  blundering  stu- 
pidity which  has  fortiinately  overreached  it- 
self and  fixed  upon  him  a  reproach  which 
must  deservedly  impair  his  reputation  either 
for  honesty  or  skill  as  a  political  manager. 


[FYom  the  Nbw  York  Daily  Bulletin,  June  27«A, 
1874.] 

The  «ird  from  Messrs.  Phelps,  Dodge  &  Co., 
printed  elsewhere,  puts  a  different  complex- 
ion on  Gen.  Butler's  rabid  attack.  In  justice 
to  the  firm,  we  submit  it  to  our  readers  with- 
out any  further  comment,  and  wish  only 
to  observe  that  as  long  as  this  explanation 
remains  unanswered,  Gen.  Butler's  charge 
against  Mr.  Dodge  of  having  caused  the  late 
Mr.  Fessenden  to  rule  for  lower  duties  for  the 
benefit  of  the  house  of  Phelps,  Dodge  &  Co. 
appears  shnply  ridiculous. 


BUTLER'S  MENDACITY. 


[From  the  N.  Y.  Journal  op  Commerce,  June 
^th,  1874.] 

We  presented,  many  years  ago,  a  graphic 
liistory  of  the  attempted  importation  of  lead 
as  works  of  art,  but  we  were  not  surprised 
that  Butler  ignored  all  the  truth  in  the  mat- 
ter, and  applied  to  Messrs.  Phelps,  Dodge  & 
Co.  an  old  joke,  with  which  the  house  he 
named  had  no  connection,  since  his  unscrupu- 


[From  (he  N.  Y.  Wohld,  June  17th,  1b74.] 

Phelps,  Dodge  &  Co.  publish  in  our  columns 
a  card  replying  to  the  charges  made  ui  the 
scurrilous  Moiety-Sanborn  speech  of  Gen. 
Butler,  during  the  closing  hours  of  the  last 
session  of  Congress.  It  gives  the  history  of 
the  galvanized  tin  plates  legislature,  which 
Butler  made  the  basis  of  a  charge  against 
Secretary  Fessenden  that  in  eight  years  he 
had.  bv  the  tampering  displacement  of  a 
comma,  lost  the  reveniie  over  $30,000,000 — 
a  charge  from  which  we  defended  the  late 
Secretary  by  an  appeal  to  the  public  records, 
showing  its  utter  groundlessness.  Phelps, 
Dodge  k  Co.  show  by  equally  cogent  proof, 
drawn  from  the  private  history  of  their  busi- 
ness with  the  Department,  that  Butler's  ac- 
cusation was  equally  false  which  attributed 
to  them  a  profit  of  $2,250,000  from  their  pro- 
curement of  the  displacing  of  that  comma. 
The  much  abused  mettil  merchants  describe 
Butler's  attack  as  "  brutal  and  cowardly," 
Strong  language  can  be  forgiven  them;  but 
the  attack  seemed  to  us  ignorant,  blundering 
and  stupid.  And  in  its  public  aspects  vvc  re- 
peat what  we  said  the  other  day,  that  it  is 
disgraceful  to  Gen  Butler  himself  to  be  so 
unfamiliar  with  tariff  legislation,  and  still 
more  disgraceful  that  in  a  House  of  Represen- 
tatives fresh  from  tinkering  a  new  tariff,  and 
and  in  a  Committee  of  Ways  and  Means  pre- 
sumably familiar  with  every  source  of  rev- 
enue, not  one  member  out  of  300 — anxious  to 
catch  him  tripping — not  one  member  rose  to 


260 


CONGRESS  AND  PHELPS,  DODGE  &   CO. 


rebuke    and   correct   General  Butler  on  the 
spot. 


IFram  the  Boston  Transcript,  June  27th,  1874.] 

Phelps,  Dodge  &  Co.,  of  New  York,  ob- 
tained in  Congress,  yesterday,  a  thorough  ex- 
oneration from  the  unjust  charges  preferred 
against  them  by  interested  parties,  i.  e.,  they 
were  made  the  victims  of  the  most  enven- 
omed blackguardism  by  tlie  Essex  representa- 
tive, which  now-adays  is  considered  the  best 
endorsement  possible  from  that  source. 


[F7'om  the  Norwich,  Conn.,  Daily  Advertiser.] 

Phelps,  Dod.  e  &  Co.  publish  a  card  in  the 
New  York  papers  of  this  morning,  which 
completely  confutes  the  charges  specifically 
preferred  against  them  b}--  Ben.  Butler  in  his 
recent  speech  in  the  House  of  Representatives, 
and  conclusively  proves  that  Butler,  as  a  paid 
attorney  of  Jayne,  made  use  of  his  official 
position  to  maliciously  utter  the  most  un- 
founded slanders.  How  long,  how  long  shall 
the  councils  of  the  nation  be  disgraced  by  the 
presence  of  such  a  scoundrel  ? 


iFrom  the  N.  Y.  Tribune,  June  26th,  1874.] 

The  correspondent  in  Brooklyn,  whose 
friendly  criticism  of  our  position  on  the  mo- 
iety bill  we  pubhshed  the  other  day,  deserves 
a  few  words  of  reply..  "  Your  pungently  ex- 
pressed indignation  against  Ben.  Butler  last 
week,"  he  says,  "was  too  strong,  unless  Mr. 
Dodge  can  come  out  with  a  flat  footed  denial 
of  the  '  comma '  business  and  the  Goddess  of 
Liberty  fraud."  *  *  *  The  Tribune  can- 
not, must  not  champion  hypocrisy.  "We  have 
never  put  ourselves  forward  as  the  champion 
of  Mr.  Dodge,  or  any  other  individual  mer- 
chant ;  on  the  contrary,  we  have  insisted  that 
the  personal  character  of  the  victims  of  Cus- 
tom House  rapacity  had  no  bearing  upon  the 
question  of  reform.  To  suppose  that  we  urged 
the  repeal  of  the  moiety  law  because  the  most 
conspicuous  of  the  recent  sufferers  under  it 
was  Mr.  William  E.  Dodge,  and  because  we 
believed  William  E.  Dodge  to  be  a  good  man, 
is  a  gross  misapprehension  of  our  motives 
and  object.  The  reasons  for  repeal  would 
have  been  just  as  strong  if  the  victim  had 
been  William  M.  Tweed.  The  moiety  law  was 
a  scandal  because  it  could  not  be  enforced 
without  hideous  abuses,  because  it  imposed 
penalties  entirely  disproportionate  to  the  al- 
leged offence,  because  it  punished  men  mer- 
cilessly for  technical  and  unintentional  in- 
fractions   of  the  statutes,   and  gauged  the 


amount  of  the  punishment  not  by  their  guilt 
but  by  their  fears  and  their  necessities,  be- 
cause it  demoralized  the  whole  customs  ser- 
vice, and  because  it  violated  the  time  hon- 
ored doctrines  of  personal  liberty  which  were 
once  so  dear  to  every  patriotic  American. 
The  defence  of  Mr.  Dodge,  therefore,  was  not 
pertinent  to  the  main  issue ;  and  although  the 
great  forfeiture  case  in  which  his  firm  was 
involved  has  frequently  been  referred  to  as  an 
illustration  of  tlie  oppressions  of  the  law,  his 
conduct  in  other  transactions  was  not  under 
examination,  and  it  was  not  our  part  to  pro- 
tect the  honorable  reputation  which  he  has 
earned  by  a  virtuous  life. 

The  firm,  however,  has  "  come  out  with  a 
flat  footed  denial,"  and  we  fancy  our  corres- 
pondent will  find  it  sufficiently  pointed  and 
emphatic.  Gen.  Butler  charged  Phelps,  Dodge 
&  Co.  with  fraudulently  importing  lead  in  the 
form  of  "  statuary"  in  order  to  avoid  the  duty. 
The  answer  to  this  is  that  when  the  famous 
lead  statuary  cases  occurred,  the  firm  was  not 
yet  in  existence,  and  none  of  the  present  or 
late  members  of  it  had  any  connection  with 
the  metal  importing  business,  Mr.  William  E. 
Dodge  being  at  that  time  a  dry  goods  mer- 
chant. Gen.  Butler  also  charged  William  E, 
Dodge  with  inducing  Secretary  Fessenden  to 
transpose  a  comma  in  a  tariff  bill,  whereby 
the  Government  was  defrauded  of  millions 
which  it  ought  to  have  received  in  the  form 
of  increased  duty  on  tin  plates.  The  reply 
which  we  print  to-day  makes  it  perfectly 
clear  that*  there  never  was  any  intention  in 
Congress  to  make  the  increase  of  duty  (100 
per  cent.)  which  Gen.  Butler  pretends,  and 
that  the  construction  adopted  without  any 
hesitation  by  the  Secretary  was  the  only 
reasonable  and  just  one.  Moreover,  Mr.  Fes- 
senden, who  was  Chairman  of  the  Senate  Fi- 
nance Committee  during  the  debates  on  the 
bill,  framed  the  disputed  sentence  himself,  and 
must  have  known,  if  anybody  did,  precisely 
what  it  meant.  These  answers  are  final. 
Tliere  is  nothing  more  to  be  said  by  Mr. 
Dodge — or  by  Gen.  Butler. 


THE   MOIETY  SYSTEM. 

[From  the  N.  Y.  Evening  Post,  June  30th,  1874.] 
We  trust  that  the  merchants  of  our  great 
importing  cities  will  not  be  lulled  into  false 
security  by  the  success  of  their  recent  efforts 
in  wresting  a  repeal  of  the  moiety  system 
from  Congress.  If  they  do  they  will  surely 
have  cause  for  repentance.  They  won  their 
victory  against  a  battalion  of  moiety  sharers, 
who  held  a  large  force  in   reserve,   wliich 


AN  EXTRAORDINARY  HISTORY. 


261 


would  have  Ijeen  displayed  at  any  time  the 
contest  had  seemed  doubtful.  Mr.  Butler,  of 
MasHachusetts,  was  the  only  political  captain 
whom  Jayne  pushed  openly  into  the  front  of 
their  line  of  battle.  But  there  were  other 
members  of  Congress,  less  directly  under 
Jayne's  command,  who  would  have  borne 
their  part  in  the  fray  if  it  had  become  ex|)edi- 
ent.  The  best  thing  the  merchants  can  do  is 
to  keep  the  public  conscience  alive  to  the 
enormity  of  the  system  under  whicli  Jayne 
and  Butler  fattened  themselves,  so  that  at 
last  it  shall  become  as  hopeless  to  reestablish 
it  as  it  would  be  now  to  reestablish  African 
slaver}'.  No  opportunity  should  be  neglected 
to  expose  the  misrepresentations  concerning 
the  moiety  system,  with  which  Congress  was 
flooded  in  the  closing  hours  of  the  session, 
and  which  otherwise  may  some  day  be  re- 
ferred to  as  uncontradicted  and  by  consequence 
as  incontrovertible. 

As  an  illustnition  of  the  misrepresentations 
to  which  we  refer,  we  will  take  the  familiar 
case  of  Phelps,  Dodge  k  Company. 

Commenting  on  the  speech  and  the  card, 
we  remarked  that  Phelps,  Dodge  &  Company 
"  had  no  need  thus  to  defend  themselves,  for 
the  extravagance  and  malice  of  the  speech 
were  its  own  refutation."  We  adhere  to  this 
remark.  But  let  us  not  be  misunderstood  to 
imply  that  it  is  not  for  the  general  interest  of 
commerce  and  honest  trade  to  minutely  ex- 
pose Butler's  false  statements,  and  to  keep 
their  falsity  present  to  the  public  mind,  liow- 1 
ever  little  such  detiiils  may  be  needful  for  the  ' 
vindication  of  the  good  name  of  the  particu- 
lar firm  which  we  have  mentioned. 

In  regard  to  Butler's  allegation,  therefore, 
which  is  referred  to  in  tlio  extract  quoted 
above,    that  every   one  of    the  disputed  in- 
voices of  this  firm  shows  that  it  was  consci 
ously  guilty  of  fraud,  we  have  taken  pains  to 
examine  the  under  valuations  in  some  of  the 
invoices  comprised  in  four  different  shipments,  I 
as  they  were   exhibited  in  the  debate  in  the  i 
Senate  on  June  1 0,  and   we   subjoin  a  brief  ' 
tabular  statement  of  the   results  of  our  in- ; 
vestigation,     which     shows,    in     successive  i 
columns,  (1)   the  dates  of  the   imporUitionsj 
and  the  names  of  the  vessels;  (2)  the  kind'! 
of  goods ;  (3)  the  amount  in  dollars,  of  these  i 
invoices,  which  was  actually  confiscated ;  (4) 
the    amount  in  dollars  of  the  actual  under 
valuations  on  these  invoices  ;  (5)  the  amount 
in  dollars  of  the  actual  loss  to  the  Treasury 
by  the   under  valuations ;  and   (6)   the  total 
amount  in  dollars  of  the  invoices  which  were 
liable  under  the  moiety  system  to  seizure  and 
confiscation  on  account  of  these  under  valua- 
tions : 


c 

i 

ja 

c8 

«B 

Oi 

•S 

a 

d 

H 

2 

(S 

(S 

1871. 

May  8. 

Abyss. 

4 

Do. 

4 

Do. 

14 

May  10. 

C.Bklyn 

16 

May  22. 

1 

C.  N.  Y 

2091 

May  30. 

C.Lond. 

9o! 

Do. 

.V) 

Do. 

103 

Do. 
Tftfjil 

160 

. 

-a     1 

e  c 

ZH 

c<ts2 

=  11 

t  nctua 
r  valuati' 
Hare. 

lit 

^  ^  ° 

Coo 

-,  C   =5 

afi 

O'O'O 

m 

•i*  "^ 

< 

•4 

$487  50 

$27  60 

$6  87>i 

53  75 

8  75 

99 

410  27 

25  27 

6  81M 

269  50 

12  00 

800 

497  75 

52  25 

18  06>4 

1.875  81 

85  31 

8  32 

287  00 

12  50 

8  na 

1,248  75 

57  00.14  25     1 

800  00 

20  00 

5  00 

U.BSO  SS 

11245  58 

fifil  44 

c2^ 

5  d  a 
S  «  g 


$33,509  37 

$22,783  98 
$82,520  87 

$18,935  25 


It  thus  distinctly  apix»irs  tliat  the  totjJ 
amount  of  the  four  shipments  was  $107,749 
42;  that  on  this  amount  there  were  under 
valuations  to  the  extent  of  i$245  58,  and  a 
consequent  lo.ss  of  duties  to  the  government 
of  $61  44:  lliat  the  amount  actually  confis- 
cated to  tne  United  States  for  this  deHn- 
quency  was  $5,530  33,  of  which  $2,265  16^ 
was  put  by  Harvey  (the  treacherous  clerk 
and  spy),  Jayne  (the  harpy),  and  the  col- 
lector, naval  officer  and  surveyor  of  this  port, 
into  their  own  pockets ;  and,  finally,  that  the 
sum  liable  to  confiscation  for  the  delinquency 
was  the  entire  $107,748  42,  for  which  whole 
amount,  according  to  the  evidence  given  to 
the  Committee  of  Ways  and  Means,  a  suit 
was  atlvised  by  Senator  Conkling.  There- 
fore, under  the  moiety  system,  wliich  Butler 
defends,  and  if  an  opportunity  shall  arise  will 
seek  to  reestablish,  the  penalty  actually  ex- 
torted for  the  under  valuation  was  more 
than  ninety  fold,  while  the  penalty  which, 
under  tiie  letter  of  the  law,  might  have  l)een 
extorted,  was  more  than  nine  hundred  fold. 
The  precise  figures  are  as  follows:  For  every 
$1  of  undervaluation  $90  1073-6144  were  ex- 
torted, and  $985  2292-6144  might  lawfully 
have  been  extorted.  Putting  aside  the  wliolo 
question  of  "  conscious  "  under  valuation  (as 
to  which,  however,  on  these  facts  there  can 
be  but  one  opinion  among  di.smterested  men), 
was  the  exaction  which  was  inflicted  a  reason- 
able one — one  worthy  of  a  just  and  humane 
government?  And  was  not  the  exaction 
which  tlie  law  would  have  allowed,  and  for 
which  a  Senator  of  the  United  States  advised 
that  suit  should  be  brought,  ten  times  more 
unreasonable  ?  Need  we  make  further  com- 
ment? 


262 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


[From  the  Philadelphia  Evening  Bulletin, 

June  27th.] 
The  savage  attack  made  on  Plielps,  Dodge 
&  Co.,  of  New  York,  b}-  Gen.  Butler  last  week 
in  the  House  of   Representatives,-  has   pro- 
voked a  reply  from  that  much  abused  firm.  It 
will  be  remembered  that  Gen.  Butler,  while 
sneering  at  the  religious  pretensions  of  Mr. 
Dodge,  made  the  following  charges  against 
Jiim  and  his  partners  :  That  the  firm  imported 
metals  in  the  shape  of  statues  to  avoid  the 
duties,  and  that  Mr.  Dodge  induced  the  Trea- 
sury Department  to  transpose  a  comma  in  the 
tariff  act  of  April,  1874,  by  which  he  cleared 
two  and  a  quarter  million  dollars.     In  our 
comments  upon  Mr.  Butler's  speech  we  de- 
clared that  these  accusations  were  unworthy 
of  belief  unless  they  should  be  sustained  by 
some  better  evidence  than  the  naked  asser- 
tion of  Mr.  Butler.     This  want  of  faith  in  the 
veracity  of  that  gentleman  is  now  shown  to 
have  becH  well  founded,  for,  of  course,  there 
can  be  no  question  as  to  which  we  shall  be- 
lieve Avhen  conflicting  statements  are  made  by 
two  such  men  as  Wm.  E.  D(  .dge  and  Benja- 
min F.  Butler.     The  reply  of  Phelps,  Dodge 
&  Co.  shows  that  the  importations  of  metal 
statuary  were  made  before  the  present  firm 
existed,  and   befoi-e  any  of   the   present  or 
former  members  of  the  firm  were  engaged  in 
the  business.    The  transposition  of  the  comma 
was  made,  not  in  the  Act  of  April,  1864,  but 
in  that  of  June,  1864,  and  it  was  made  by 
Secretary  Fessenden.  as  honest  a  man  as  ever 
lived,  because  he,  as  a  member  of  the  Senate 
at  the  time  of  the  passage  of  the  bill,  per- 
ceived  that  the  sense  of  the   measure  had 
been  changed  by   a   copying  clerk.      More- 
over, the  law.  as  it  stood  after  the  correction 
was  made,  was  not  in   favor   of    the  firm, 
who  would  have  realized  more  under  the  first 
interpretation  than  under  the  reformed  law. 

This  statement  of  facts  will  certainly  be 
copied  all  over  the  country,  and  it  will  be 
likely  to  neutrahze  the  effect  of  Mr.  Butler's 
speech.  Even  the  smartness  of  that  effort 
will  not  atone  for  the  wanton  misrepresenta- 
tion with  wliich  it  is  filled ;  and  the  author 
will  find  that  in  his  attempt  to  bolster  up  his 
reputation  by  an  apology  for  Jayne  and  San- 
born, and  a  ferocious  onslaught  upon  a  re- 
spectable mercantile  house,  not  even  the  most 
cunning  and  dexterous  use  of  falsehood  will 
suffice  to  attain  his  object.  He  is  beaten  by 
a  plain  utterance  of  truth,  which  is  once 
again  more  than  a  match  for  elaborate  misre- 
presentation. 


man  of  such  high  character  as  William  E. 
Dodge  is  known  to  be,  like  that  which  Butler 
made  upon  Mr.  Dodge  during  the  closing 
hours  of  the  late  session  of  Congress.  Nobody 
else  would  have  been  so  lost  to  a  sense  of 
common  decency  as  to  traduce  one  of  the 
most  valued  philanthropists  of  the  times,  and 
to  sneer  at  his  Christian  virtues.  But  "  Old 
Cockeye  "  was  just  the  man  for  that  kind  of 
work,  and  in  performing  it  he  evinced  no 
more  conscientious  regard  for  what  he  could 
not  but  have  known  was  the  truth,  than  a 
rhinoceros  would  have  shown  if  it  had  been 
admitted  to  the  floor  of  the  House  of  Eepre- 
sentatives,  and  been  allowed  to  flounder 
around  as  he  pleased.  He  evaded  every  op- 
portiniity  which  was  given  him  to  speak 
when  the  Sanborn  business  was  properly 
before  the  House  for  discussion  ;  and  waited 
until  the  last  hours  of  the  session,  when 
there  could  be  neither  time  nor  opportunity  to 
answer  his  misrepresentations,  and  then  he 
ejected  his  villifications  upon  the  audience 
which  had  assembled  to  hsten  to  him,  know- 
ing that  what  he  said  would  be  published  by 
the  telegraph  and  a  regiment  of  reporters, 
from  one  end  of  the  land  to  the  other. 

But  Butler  having  had  his  ''say,"  Messrs. 
Phelps,  Dodge  &  Company  now  have  theirs. 
The  card  to  their  "  friends  and  the  public  "  is 
a  direct  reply  to  the  allegations  which  were 
made  by  Butler  in  his  despicable  speech. 

The  statements  made  by  this  firm  are  veri- 
fied by  other  facts  that  are  well  known  in 
business  circles,  and  by  facts  that  were 
brought  out  when  the  Sanborn  and  Jayne 
business  was  before  Congress.  That  Butler 
absolutely  disregarded  those  facts  and  assailed 
the  personal  honor  and  integrity  of  William 
E.  Dodge,  with  the  barest  and  at  the  same 
time  the  most  audacious  misrepresentations, 
is  another  indication  that  he  is  as  regardless 
of  a  sense  of  truth  as  he  is  reckless  of  a  sense 
of  fear.  He  is  a  dangerous  man,  just  as  all 
brute  force  is  dangerous  when  coupled  with 
an  intellect  in  which  the  moral  faculties  are 
largely  deficient.  But  the  American  people 
have  placed  a  tnie  estimate  upon  him,  and 
the  conclusion  is  justified  by  existing  circum- 
stances that  Butler  has  at  last  reached  the 
end  of  his  tether. 


[From  the  Syracuse  (N.  Y.)  Journal.] 
Nobody  but  Ben  Butler  would  have  had 
the  temerity  to  make  a  wanton  assault  upon  a 


A  LIBEL  ANSWERED. 

[From  the  Boston  Advertiser.] 
The  firm  of  Phelps,  Dodge  &  Co.  have  felt 
obliged  to  reply  to  the  dastardly  attack  made 
upon  them  by  General  Butler  in  his  speech 
near  the  close  of  the  session.  The  charges 
are  taken  up  seriatim  and   are  conclusively 


AN  EXTRAORDINARY  HISTORY. 


263 


answered.  Nothing  can  be  added  to  the  re- 
plies to  the  second  and  third  charges,  and 
very  Uttle  to  the  first — touching  tlic  importa- 
tion of  lead  in  the  form  of  statuary,  free  of 
duty,  to  be  melted  down  as  soon  as  received 
by  importers.  The  official  record  of  Congress 
gives  a  certain  color  to  the  accusation.  In 
the  &lohe  for  the  session  of  March  1,  1865 
(H8th  Congress,  2d  session,  vol.  2,  p.  1,255), 
the   tariff  bill  being  under  discussion  in  the 


and  Jayne  matter.  His  connection  with  tho.se 
two  legalized  government  leeches  on  the  mer- 
chants has  been  disgraceful,  but  not  more  so 
than  his  efforts  on  the  floor  of  i'ongress  to 
blacken  the  hitherto  untarnished  repufition 
of  tire  largest  metal  importing  house  in  the 
country  Had  Mr.  Butler  not  shared  the 
.Fayne  and  Sanlx)rn  8|X)ils,  the  nation  might 
calmly  listen  to  his  endorsement  of  the  sys- 
tem, but,  as  it  i.s,  Mr.  Butler  would  have 
done  better  to  have  said  notliing  on  the  sub- 


house,  in  aimmittee.  a  section   was  read  re- 

strieiing  the  term  "  stiituary,"  then  on  the  ject,  for  the  impression  made  by  such  an  in- 
free  list,  to  "  professional  productions  of  a  ;  lerested  champion  could  not  fail  to  be  bad, 
statuary  or  of  a  sculptor  only.  '  Mr.  Kernan  I  even  had  he  made  a  most  discreet,  eloquent 
inquired   what  this   meant     Mr.  Morrill,  of  ,  and  effective  speech  instead  of  the  one  made. 

Vermont,  then  a  member  of  the  house,  ex- 1  

plained  how  metals  had  been  imported  cast  in  I 
images,  so  as  to  evade  duties.  Then  occurs  ' 
this  passage:  i 

Mr.  Eldhedoe.— I  8hould  like  to  know  from  the  ; 
gentleman  from  Vermont  whether  this  does  not  re-  ; 
fer  to  on-  particular  firm.  I  want  to  know  If  it  | 
does  not  refer  to  Phelps,  Dodge  &  Co.,  and  to  that  , 
lirm  alone  *  i  _  i,  ,i  ,.      /.       ,  , 

Mr.    Stkvens.— When    statuary    was  admitted  I  'SecreUiry    Bontwell  credit   for   honesty  and 
free  we   had  statues  of   Webster  and  Clay  and  I  common  sense.     But  his  vindication  of  him- 


MR. 


BOUTWELL  ON  PHELPS,  DODGE 
&  CO. 


[From  Ui4  TnoT  Whig,  Jum  ^th.] 
Vsa   have   always   been   disposed   to  give 


others  in  copper  and  lead,  imported,  and  so  soon 
t  of  the  custom 
It  was  a  fraud 


as  .hey  were'Cdrd"a,;nik"nroVX'c''u=  I  »""•'""'  "'«  administration  in  the  ,™n,actio„ 


house  they  were  melted  down. 

upon  the  revenue. 
Mr.  Kldredok.— What  firm  did  that 
Mr.  Stevens.— Phelps,  Dodge  &  Co. 


by  which  a  respectable  and  honest  firm  was 
swindled  out  of  $270,000.  is  .so  weak  and 
foolish  that  we  begin  to  doubt  his  honesty. 
It  wjifl  well  known  to  Mr.  Boutwell  and  to  uU 
This  charge  was  fully  e.\plained  at  the  j  the  Ct.sUim  House  oflicials,  that  this  firm,  in 
lime,  but  the  record,  having  been  printed,  was  '\  order  \m  cover  any  possible  deficiency  in  the 
tmalterable.  f  he  lact.s,  as  suited  then  and  [  valuation  of  their  importations,  had  many 
often  repeated  since,  were  that  the  offence  times  voluntarily  added  to  the  invoice  value, 
charged  upon  Phelps,  Dodge  &  Co  was  com-  ^"^  P^i^  ""  excess  of  duties,  and  yet  he 
mittcd  by  an  earlier  firm  of  Phelps  k  Peck,  affects  to  Ijelieve  that  there  was  some  mystery 
whose  successor,  the  present  firm,  was  form- '  about  a  few  small  vouchers  which  had  es- 
ed  between  the  tinje  of  the  offence  and  the  '  caped  everyl)ody's  notice  but  the  prying  eyes 
date  of  the  above  quoted  debate,  Mr.  Phelps  I  "^  a  dishonest  clerk  It  was  evident  to  Jayne. 
alone  remaining  of  the  former  house.  Since  :  and  must  have  Vkjcu  plain  to  Mr.  Boutwell, 
then  Mr.  Phelps  has  died,  and,  though  his  i  that  the  leaves  torn  from  the  books  of  the 
name  is  still  used,  Mr.  Dodge  is  the  head  of  !  company  were  stolen.  Whoever  brought  them 
the  firm.  [As  before  shown,  the  charge  even  '  to  Jayne,  he  must  have  Ixjen  either  a  thief  or 
against  the  firm  of  Phelps  A  Peck  was  without   an   accomplice  of   the    thief.     Mr.  Boutwell 


foundation. — Ed.]  Tliese  facts  were  perfectly 
well  known  to  Gen.  Butler,  whose  only  apology 
for  repeating  tlie  falsehood  is  that  he  did  not 
invent  it.  So  in  the  ne.xt  generation  some 
knave  in  Congress,  who  may  have  a  grudge 
against  the  successors  to  the  present  firm  of 
Phelps,  Dodge  &  Co.,  will  go  to  Butler's 
speech  in  the  Recard  for  charges  against 
them.  For  a  slander  once  rooted  is  there 
forever. 


[From  the  Boston  Journal  of  Commebce,  Jutie 
2^th.] 

Butler  fairly  outdid  his  previous  efforts  in 
mud  throwing  in  his  speech  on  the  Sanborn 


thinks  it  honorable  in  the  Government  to  ac- 
cept and  use  stolen  evidence.  We  think  the 
administration  that  would  use  stolen  goods  is 
a  party  to  the  felony.  Mr.  Boutwell  thinks 
the  law  was  mercifully  administ^ered.  Wo 
think  it  was  an  unconstitutional  law  un- 
mercifully administered.  Mr.  Boutwell  was 
afraid  to  do  right  in  this  case  and  in  others. 
He  looked  calmly  on  and  let  a  pack  of  spies, 
thieves  and  swindlers,  some  in  and  some  out 
of  office,  harry  the  merchants  and  plunder 
them  and  the  Treasury  under  a  law  that  he 
says  was  a  bad  one,  and  yet  he  casts  his  vote 
for  the  very  worst  section  in  it,  and  most 
dangerous,  because  it  is  a  violation  of  private 
rights. 


:64 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


[Front  Harper's  Weeklt,  JkIij  IKh,  1874.] 

Probably  very  few  persons  who  read  the 
speech  of  General  Butler  against  the  house  of 
Phelps.  Dodge  &  Co.  believed  that  liis  state- 
ments were  correct,  or  doubted  that  it  was  an 
ingenious  special  plea  of  an  ''  Old  Bailey"  ad- 
vocate. It  was  ttie  final  desperate  effort  of 
the  apologist  of  the  gross  iniquities  of  the 
Sanborn  and  moiety  affairs  to  discredit  the 
house  through  whose  persecution  the  in- 
famies of  the  wiiole  system  were  exposed,  and 
the  position  of  General  Butler  has  been  dis- 
tinctly revealed.  But  although  the  assailant 
was  utterl}^  and  ludicrously  discomfited  in 
the  House,  Messrs.  Phelps.  Dodge  &  Co.  have 
not  chosen  to  allow  his  deliberate  misrepre- 
sentations in  regard  to  their  house  to  pass  un- 
exposed, and  have  conclusively  replied  to  his 
charges. 

The  reply  of  the  firm  was  not  necessary  to 
the  vindication  of  a  mercantile  reputation 
which,  since  the  facts  have  been  known,  is 
seen  to  have  been  wholly  unstained,  but  it 
completes  the  exposure  of  the  utter  reckless- 
ness of  General  Butler's  statements. 


I  nity  for  words  spoken  in  debate  which  the 
I  Constitution  gives  to  a  member  of  Congress, 
I  rendering  him  liable  to  punishment.  The  re- 
j  suit  is  just  what  we  presumed  it  would  be 
!  wlien  we  last  week  called  the  attention  of 
!  Phelps,  Dodge  &  Co.  to  the  allegations  of 
I  General  Butler.    We  invite  our  readers  care- 


fully to  peruse   the  statement,   which  4hey 
will  find  in  another  column. 


[From  iJie  N.  Y.  Independent,  July  2d,  1874.] 

"We  publish  in  another  column  the  state- 
ment of  Phelps,  Dodge  &  Co.  in  regard  to 
the  malignant  attack  upon  that  firm  by  Gen- 
eral Butler  just  at  the  close  of  the  session 
of  Congress,  and  after  the  Anti-Moiety  Bill 
had  been  passed  by  both  houses.  The  state- 
ment completely  vindicates  the  firm,  and 
seems  to  show  General  Butler  to  be  either 
an  ignoramus  (which  he  is  not)  or  a  vile  slan- 
derer. As  to  the  statuary  business,  what- 
ever truth  or  falsehood  there  may  be  in  this 
story,  it  can  have  no  apph cation  to  this  firm 
or  to  the  members  thereof,  since  the  firm 
was  not  in  existence  at  the  time  of  the  alleged 
transactions.  As  to  the  "  comma"  fraud  upon 
the  revenue,  the  statement  shows  that  the 
comma,  in  engrossing  the  bill,  w^as  added  by 
mistake ;  that  as  thus  added  it  made  the  law 
absurd;  and  that  Secretary  Fessenden.  who 
was  a  member  of  the  Senate  when  the  bill 
was  passed,  and  also  chairman  of  the  con- 
ference committee  that  reported  the  bill,  re- 
membering that  the  very  point  in  question 
was  discussed  by  the  committee,  ordered  the 
l)ill  to  be  constructed,  as  was  intended  at  the 
time  of  its  passage.  As  to  the  charge  of 
frauds  by  false  invoices  consciously  and  con- 
tinuously perpetrated  by  this  firm,  it  is  not 
too  much  to  say  that  this  is  simply  wholesale 
lying,  without  evidence  to  support  it,  as  malig- 
nant as  it  is  reckless  in  its  character,  and,  if 
the  author  was  not  shielded  by  the  immu- 


[From  the  Presbyterian,  July  4t7i,  1874.] 

"We  direct  the  attention  of  our  readers  to 
the  statement  of  Phelps,  Dodge  &  Co.,  New 
York,  to  be  found  on  the  second  page  of  the 
advertising  sheet  of  this  week's  Presbyterian. 
This  well  known  house  pleads  earnestly  for 
its  good  name,  and  we  do  not  wonder  at  the 
earnestness  shown.  A  well  established  repu- 
tation is  not  a  thing  to  be  sacrificed  easily, 
and  mercantile  honor  is  to  a  true  merchant 
above  all  price.  Mr.  "William  E.  Dodge,  the 
senior  partner  in  this  firm,  is  well  known  in 
the  Presbyterian  Church,  and  it  will  be  a 
difficult  thing  to  convince  men  that  he  has 
been  a  party  to  the  constant  violation  of  the 
law  of  the  land,  or  that  he  has  ever  consented 
to  fraud  upon  the  Government  which  he  has 
upheld  by  purse  and  speech,  or  that  he  has 
sacrificed  a  "  good  conscience  before  God  and 
man." 


MOTETY'S   LAST   GASP. 

[From  the  N.  Y.  Financiat.  Chronicle,  July  4th, 

1874.] 

It  is  a  well  known  truism  that  neither  the 
law  nor  its  executor  finds  any  favor  in  the 
eye  of  the  offender.  Hence,  very  little  won- 
der has  been  felt  at  that  closing  parting  gasp 
of  the  Massachusetts  statesman  against  the 
moiety  reform  and  Mr.  Dodge,  the  chief  vic- 
tim of  the  defunct  system.  It  was  an  impar- 
donable  offence  for  the  members  of  that 
firm  to  show  any  sign  of  not  liking  to  be  rob- 
bed of  two  hundred  and  fifty  thousand  dol- 
lars :  worse  still  was  it  to  become  chief  wit- 
ness against  the  law  and  against  those  suck- 
ing doves  that  fatted  off  it.  And  although 
it  sounds  a  little  boyish  and  puerile  for  a  full 
grown  Congressman  to  brand  the  whole  race 
of  God  fearing  men  as  impostors  and  hypo- 
crites, because,  forsooth,  this  firm  did  not 
turn  tlie  other  cheek,  or  give  those  Govern- 
ment spies  and  their  abettors  their  shirts  when 
they  took  from  them  their  coats,  still  the  pub- 
lic can  forgive  the  learned  Congressman's 
weakness  and  worse  taste  while  they  are  re- 
joicing in  the  blessed  results  obtained. 


AN  EXTRAORDINARY  HISTORY. 


265 


We  notice  that  Messrs.  Phelps,  Dodge  & 
Co.  have  seen  fit  to  answer  some  of  the 
charges  which  welled  up  out  of  this  pure 
minded  Massacliusetts  statesman's  breast;  it 
was  cruel  and  imcharitable  of  them  thus  to 
expose  him  further,  for  they  leave  him  in  a 
very  pitiable  condition.  But  it  gives  him  an 
occasion  to  repeat  his  beautifully  classic  idea 
that  all  merchants  are  liars  and  all  Christians 
are  cheats,  so  to  him  there  will  be  some  com- 
pensation ;  and  we  shall  expect  to  see  at 
the  next  session  of  Congress  a  few  more 
squirmings  and  contortions  of  these  wounded 
but  only  half  dead  victims  of  this  repeal, 
whose  only  desire  is  to  reenact  a  measure 
on  which  they  have  so  long  feasted  and  fat- 
tened. 

They  will  fail,  however.  The  country  feels 
a  wonderful  relief  in  being  rid  of  that  whole 
system,  and  it  will  never  knowingly  return 
to  it  or  anything  similar. 

Yet  this  work,  according  to  our  idea,  is 
not  completed.  Tlio  reixjal  has  been  accom- 
plished by  the  personal  exertions  of  a  few 
men.  "We  are  imder  groat  obligations  to 
them.  The  extremely  al)le  argument  of  Mr. 
Schultz,  the  clear,  convincing  evidence  of  Mr. 
Dodge,  besides  tlie  efforts  and  evidence  of 
many  others,  have  removed  this  modem  in- 
quisition. But  the  matter  should  not  be  left 
thus.  The  Massachusetts  stjitesman  writhes 
under  this  repeal;  let  us  have  a  committee 
appointed  by  the  next  Congress  to  inquire 
into  and  discover,  if  possible,  what  it  is  in 
this  repeal  that  is  pinching  him  so.  and  all 
the  other  chief  participators  in  this  fraud, 
let  us  Jiave  them  up  and  find  out  where  the 
money  went,  and,  wherever  the  law  was  ex- 
ceeded, make  them  pay  it  back.  This  is  all  pos- 
sible; it  only  requires  the  continuance  of  tlie 
persistency  and  wisdom  hitherto  used  in  this 
investigation.  Great  good  may  be  thus  ac- 
complislied,  and  the  recurrence  of  such  evil 
practices — even  if,  a  bad  law  should,  by  fair 
means  or  foul,  be  again  placed  upon  our  statute 
books — will  become  impossible. 

Finally,  if  it  is  the  verdict  of  the  people 
that  this  statute  was  a  bad  one.  and  that  it 
was  oppressively  and  wickedly  executed,  we 
think  there  can  be  no  doubt  but  that  the 
Government  should  at  least  return  its  ix)r- 
tion  of  the  plunder  to  those  to  whom  it  rightly 
l:)elongs.  No  pubjic  good  can  be  served  by  re- 
taining two  hundred  and  fifty  thousand  dollars, 
or  half  that  sum,  because  there  are  deficits  of 
about  fifteen  hundred  dollars  in  duty  pay- 
ments out  of  an  importation  covering  forty 
millions  of  dollars.  Besides,  there  are  some 
very  hard  cases  where  the  fines  imposed, 
without  any  intentional  fault  on  the  part  of 


the  person  fined,  have  resulted  in  financial 
ruin.  All  those  wrongs  should  be  righted, 
and  we  trust  that  our  merchants  will  not  suf- 
fer the  matter  to  be  quieted,  but  with  the 
meeting  of  Congress  will  again  be  prepared 
to  pursue  it  until  the  right  of  an  oflBcer  to 
rob  the  citizen  under  color  of  law  is  nega- 
tived forever. 


[From  the  N.  Y.  Financikr,  June  Zlth,  1874.] 

Thus  the  unworthy  animal,  Jayne,  letires 
into  private  life  with  contempt  and  a  fortune, 
and  the  Government  of  the  United  States  re- 
tires from  its  partnership  with  him  and  his 
gang  of  robbers  and  spies  on  the  usual 
thieves'  basis  of  dividing  plunder.  The  new 
law  is  not  in  all  respects  what  it  should  be, 
but  it  marks  a  reform,  one  who.se  importance 
is  not  likely  to  be  immediately  appreciated 
except  by  those  who  have  either  worked  for 
it  or  have  lx?en  made  victims  of  the  oppres- 
sion at  which  it  was  directed.  That  oppres- 
sion died  hard,  as  all  oppressions  do  which 
not  only  gratify  the  love  of  power  but  have 
money  in  them  ;  tlie  Custom  House  has  been 
for  many  years  becoming  more  and  more  the 
sotirce  of  money  supplies  and  office  rewards 
for  party  campaigns,  and  it  resigned  this  Star 
Chamber  with  manifest  reluctance.  Senator 
Flowe  discovered  nothing  here  two  years  ago 
except  a  few  spots,  which  needed  some 
touches  of  investigation  whitewash,  and  he 
wants  to  know  what  is  the  matter  with 
Jayne,  of  whom  we  had  heard  nothing. 
Senator  Conkling  was  too  acute  to  openly 
opfiose  the  bill,  but  he  indirectly  lalwred 
against  it,  yet  it  was  too  seriously  demanded, 
and  there  was  no  resisting  public  opinion, 
even  in  the  Senate. 

This  reform  is  one  thing  which  Mr.  Dodcre's 
$271,000  went  towards  procuring  ;  it  is  only 
just  to  say,  however,  that  no  small  share  of 
the  credit  belongs  to  Mr.  Schultz,  who  gave 
— what  merchants  are  too  unwilling  to  give, 
as  compared  with  gifts  of  money — active 
personal  services.  This  Tweedism  in  national 
administration,  which  corrupted  politics  from 
White  House  to  caucus,  and  debauched  pub- 
lic morals  by  exhibiting,  on  a  large  scale  and 
in  the  open  light  of  day,  with  all  the  pres- 
tige which  governmental  operations  carry,  the 
possible  rewards  of  infonning,  as  compared 
with  the  slow  ones  of  honest  industry,  is 
brought  to  an  end  for  the  present.  That  it  is 
quite  extinct  would  be  too  much  to  say,  for 
the  liberty  now  nearly  regained  was  not  all 
lost  in  a  year,  and  a  vigilant  and  firm  public 
opinion  alone  will  retain  the  position  perma- 
nently.    Looking  back,    and  comparing  the 


266 


CONGRESS  AND  PHELPS,  DODGE  &  CO. 


new  law  with  tlie  old  practices,  it  does  seem 
incredible  that  such  outrages  as  belong  to  a 
recognized  tyrannical  Government  have  actu- 
ally been  permitted  hero  in  this  country  and 
metropolis.  But  we  congratulate  the  whole 
nation  on  this  result. 


THE  MOIETIES  REPEAL. 

[From  the  N.  Y.  World,  June  24th,  1874.] 

The  moieties  repeal  bill,  abolishing  arbi- 
trary seizures  of  books  and  papers,  having 
survived  all  attempts  of  prominent  Repub- 
licans in  the  Senate  to  smother  it,  and  having 
finally  become  law,  the  question  naturally 
arises  why  the  law  authorizing  such  seizures 
was  still  retjiined  upon  the  statute  book  after 
the  oppression  which  it  inflicted  upon  mer- 
chants and  the  corruption  which  it  bred  among 
Custom  House  agents  were  so  thoroughly  ex- 
posed by  Senators  Bayard  and  Casscrly  two 
years  ago.  The  answer  to  this  question  is  to 
be  foimd  partly  in  the  combined  ignorance 
and  indifference  of  the  mass  of  Republican 
legislators  concerning  all  questions  not  of  a 
purely  partisan  chaiacter,  but  mainly  in  the 
rich  revenues  produced  by  moieties,  not  only 
for  Congressional  attorneys  of  the  Custom 
House  but  for  Republican  election  funds. 
The  repeal  of  th  •  law  now  is  the  ultimate 
outcome  of  an  accident  which,  however  pain- 
ful and  expensive  it  may  have  been  to  the 
parties  directly  concerned,  has  nevertheless 
proved  a  lucky  one  for  the  mercantile  com- 
munity of  this  city,  and,  indeed,  for  honest 
merchants  throughout  the  country.  The 
Custom  House  investigation  of  1871-72  re- 
vealed some  unusually  ugly  scandals,  which 
all  the  whitewash  wherewith  the  Custom 
House  was  coated  by  Buckingham,  Howe, 
Pratt  and  Stewart  could  not  hide  out  of  sight. 
The  Democratic  Senators,  Bayard  and  Cas- 
serly,  were  more  than  a  match  for  the  Repub- 
Ucan  majority  of  the  Investigating  Committee. 
In  fact,  they  produced  testimony  which  com- 
pletely peeled  ofE  the  whitewash  so  assidu- 
ously laid  on  by  the  majority,  and  tore  away 
ihe  covering  from  the  slimy  tracks  which  led 
from  Loot's  general  order  stores  to  the  White 
House  at  Washington. 

The  most  damaging  testimony  given  be- 
fore the  Investigation  Committee  in  1871-72, 
against  the  N'ew  York  Custom  House,  was  by 
Mr.  William  E.  Dodge,  and  appears  in  the 
minority  report  of  Messrs.  Bayard  and  Cas- 
serly,  as  follows : 

Q.  Do  you  think  that  the  present  Hystem  tends  to 
induce  fraud  and  corruption  in  the  employes  5"  A. 
I  do  ;  I  have  no  hesitation  in  saying  so, 

Q,  Have  you  good  reason  to  believe  that  there 


are  fraudulent  transactions  generally  in  the  collec- 
tion of  the  revenues  here  ?  A.  lam  not  sufficiently 
informed  to  give  an  opinion;  I  have  no  hesitation 
in  saying  this:  that  from  tne  standard  of  character 
in  the  Custom  House.  I  would  not  take  the  average 
employes  into  my  store  under  any  consideration,  or 
trust  them  with  my  business  at  all. 

Q.  By  character,  do  you  mean  business  or  moral 
character?  A.  I  mean  moral  character  and  business 
qualifications— both.  ^ 

******  at 

Q.  How  does  the  present  system  of  appointment 
to  Custom  House  places  affect  the  commerc  al  in- 
terests of  New  York  and  the  country  ?  A.  My  im- 
pression is,  if  character  and  qualifications  were 
the  standard  of  employes  in  the  Custom  Hoise, 
that  two  thirds  of  the  number  now  paid  by  the 
Government  would  do  all  the  business  better  than 
it  is  done  now. 

Q.  And  as  to  expense?  A.  Equally  aschenp.  It 
cannot  fail  to  be  a  charge  on  the  commerce  of  New 
York  to  have  its  Custom  House  an  hospital  for 
broken  down  politicians.  That  is  just  wliat  it  is. 
There  is  no  use  in  talking  about  it;  that  is  just  what 
it  is.  There  are  men  there— hundreds  of  th^^m— 
that  I  would  not  allow  to  come  in  my  office  if  they 
would  come  for  nothing.  I  would  not  trust  them  in 
my  store  to  have  anything  to  do  with  my  goods. 
They  are  broken  down  politicians,  skilled  only  in 
political  manipulations.  For  rapiditv  and  correct- 
ness in  performing  the  business,  and  the  intricate 
calculations  necessary  in  the  Custom  House,  a  man 
should  learn  and  understand  it,  and  get  the  facili- 
ties. In  our  house  we  train  men  for  particular 
branches  of  business,  and  have  clerks  who  have 
been  at  the  same  desk  for  twenty  and  thirty  years, 
A  man  who  has  been  in  the  Custom  House  for  ten 
years  knows  how  to  do  the  business,  where  to  find 
the  necessary  papers,  etc.  In  his  place  there 
comes  a  stupid,  drunken,  broken  down,  swearing 
fellow,  whom  you  have  to  tell  how  to  do  his  busi- 
ness and  show  where  to  find  the  papers,  etc.— lie- 
2)0rt  of  1871,  ])p.  45,46,47. 

This  is  plain  talk,  and  it  clears  up  a  mj^s- 
tery.  Mr.  Dodge  and  his  firm,  hke  a  great 
man}^  other  bold  witnesses,  were  duly  put  in 
the  disgrace  booh,  and  when  a  3-ear  later  the 
spy,  I  iarvey,  trumped  up  the  charges  against 
the  firm,  the  gratuitous  evidence  giver's 
offences  were  sorely  remembered.  We  know 
the  full  result  of  this  miserable  business. 
Never  before  was  such  a  penalty  exacted 
from  any  firm,  either  in  the  western  or  east- 
ern hemisphere,  for  such  trifling,  paltry  delin- 
quencies, if  at  all.  The  moiety  people  and 
their  advocates  were  under  the  impression 
that,  inasmuch  as  Phelps,  Dodge  &  Co.  had 
been  "squeezed,"  they  would  be  content  to 
keep  quiet.  But  the  firm,  although  mulcted 
in  the  sum  of  $271,000  without  llincliing, 
refused  to  be  considered  dishonest  by  the 
public,  and  it  is  owing  to  them  and  their  con- 
tinual explanations  that  the  mercantile  com- 
munity was  finally  and  thorougiily  aroused, 
and  the  matter  not  only  of  Phelps,  Dodge  & 
Co.,  but  of  other  firms,  brought  before  the 
Ways  and  Means  Committee.  The  mere  acci- 
dent of  squeezing  Phelps,  Dodge  &  Co.  was 
the  actual  means  of  breaking  up  the  outra- 
geous laws  of  1863  and  1867.     But  however 


AN    EXTRAORDINARY    HISTORY. 


267 


much  tlie  House  of  Representatives  was  in- 
clined to  aid  in  the  good  work,  the  Senate, 
with  Mr.  Conkliug  as  its  leader,  was  by  no 
means  favorably  disposed  towards  the  Anti- 
Moiety  Bill.  Nor  were  the  whitewashers — 
Buckingham,  Howe,  Pratt  and  Stewart — wil- 
ling to  call  a  spade  a  spade  in  1874,  which 
they  had  styled  a  rose  cultivator  in  1871-72. 
But  fortunately  there  was  a  Democrat  in  the 
Senate  whose  iron  will  and  indomitable  tact 
and  energy  overcame  all  difficulties.  Senator 
Bayard  was  determined  to  break  this  great 
scandal  up.  He  first  secured  his  followers, 
where  it  was  natural  that  he  should  first  seek 
them,  in  the  Democratic  ranks,  and  then  ap- 
pealed to  the  more  fair  and  liberal  Republican 
Senators,  of  whom  none  deserve  greater 
praise  than  Senator  Wadleigh.  of  New  Hamp- 
shire, Senator  Alcorn,  of  Mississippi,  and 
some  of  the  silent  Senators  b\it  certain 
voters,  such  as  Lewis,  Tipton  and  "Wasliburn. 
It  was  by  the  able  leadership  of  Sejiator  Bay- 
ard and  the  unflinching  patience  of  liis  follow- 
ers that  this  arduous  fight  was  won  in  the 
Senate. 

The  general  results  of  tliis  victory  are  as 
yet  but  faintly  realized  by  Democrats,  and 
least  of  all  by  Democrats  in  their  capa- 
city of  free  traders.  In  the  first  place  it 
breaks  up  a  very  lucrative  electioneering  fund, 
which  was  a  standing  danger  to  the  country  ; 
and  secondly,  it  introduces  the  small  end  of 
the  wedge  for  the  splitting  up  of  the  liigh 


tariff  system.  It  has  been  proven  fully  and 
substantially,  that  midnight  seizures  and  a 
brigade  of  spies  cannot  stop  smuggling  and 
under  valuation  as  long  as  a  high  tariff 
system  exists.  The  only  method  of  giving  the 
death  blow  to  extensive  under  valuation  lies  in 
reducing  the  tariff  to  such  an  extent  as  to 
make  smuggUng  unprofitable.  PLxtensive  un- 
der valuations  cannot  be  made  without  collu- 
sion, and  this  costs  money.  Those  conver- 
sant with  the  mysteries  of  this  dark  art  affirm 
that  smuggling  costs  from  8  per  cent,  to  10 
per  cent  of  the  value  of  the  smuggled  goods. 
This  pays  well  enough  when  the  duty  is  60 
or  90  per  cent,,  but  it  is  obvious  that  if  the 
duty  is  reduced  to  a  basis  of  15  or  20  per 
cent,  the  under  valuations  made  by  collusion, 
and  costing  from  8  to  10  per  cent.,  will  be 
found  an  unprofitable  business.  It  is  obvious 
that  all  honest  advocates  of  a  fair  tariff  have 
gained  the  outpa^ts  of  a  fortress  that  will  be 
assailed  and  carried  in  the  Forty-fourth  Con- 
gress, when  a  Democratic  House  will  have  a 
Demoeratio  chainnan  on  the  Ways  and  Means 
Committee. 

As  to  Butler's  tirade,  however  effective 
it  may  prove  in  giving  notoriety  to  the 
scandalous  defects  of  the  present  tariff  sys- 
tem, that  was  merely  a  hootincr  and  yelling 
raised  after  the  real  battle  had  been  fought 
and  won  under  Democratic  leadership.  More- 
over, Butler's  bhmders  of  statement  are  mon- 
strous, as  we  shall  show  another  day. 


SOI  MARY  OF  ALL  THE  PROCKEDINGS 


IN   THE   CASE   OF 


PHELPS,  DODGE  &  CO 


BY 


Hon.  DAVID  A.  WELLS 

Laie  Commissioner  of  the  Treasury. 


Although  there  was,  probably,  not  a  newspaper  throughout  the  whole 
length  and  breadth  of  the  United  States  which  did  not,  during  the  years 
1873  and  1874,  discuss  repeatedly,  and  to  a  greater  or  less  extent,  the  case 
of  Phelps,  Dodge  &  Co.,  and  the  relations  of  this  firm  with  the  Federal 
Government,  yet  there  was  not  at  any  time  during  this  whole  discussion 
anything  like  a  full,  clear  and  connected  history  of  the  exceedingly  curious 
transactions  under  consideration  ever  brought  before  the  public.  The 
time  has  now,  however,  arrived,  when  such  a  statement  can  be  made;  and 
although  not  in  any  degree  needed  for  the  vindication  of  the  firm,  whose 
entire  and  honorable  acquittal  of  all  the  charges  brought  against  them  was, 
after  full  investigation  and  discussion,  substantially  embraced  in  the  repeal, 
by  a  nearly  unanimous  vote  of  both  Houses  of  Congress,  of  the  so-called 
"  moiety"  and-'-  seizure  "  laws  of  the  Customs,  as  they  existed  in  1873,  and 
under  which  the  proceedings  in  question  against  the  firm  were  instituted, 
yet  the  importance  of  a  succinct  and  popular  narration  of  the  principal 
involved  circumstances,  considered  either  as  a  contribution  to  the  political 
history  of  the  "  times,"  and  to  the  cause  of  economic  science  generally, 
cannot  well  be  over  estimated. 

To  premise,  the  firm  of  Phelps,  Dodge  &  Co.  is  one  of  the  oldest  in  the 
United  States,  and  in  the  magnitude  of  its  special  business — dealers  in 
metals — perhaps  without  an  equal  in  the  commercial  world.  During  the 
whole  period,  moreover,  of  its  long  history — extending  now  over  three 
generations — the  character  of  this  great  house  for  enterprise,  probity  and 
liberality,  had  come  to  be  regarded  hf  nearly  all  that  portion  of  the 
American  people  conversant  with  commercial  affairs,  as  somewhat  in  the 
light  of  a  standard,  with  which  comparisons  might  be  instituted,  but 
which,  in  the  experience  of  actual  every  day  life,  it  would  be  exceedingly 
difficult  to  surpass,  or  indeed  to  find  an  even  and  exact  parallel.  In  short, 
it  is  no  exaggeration  to  say  that  no  firm  in  the  United  States,  acting  either 
collectively  or  through  its  individual  members,  has  endeavored  more  con- 
tinuously and  practically  to  carry  out  the  principle  that  abundant  means 
and  large  opportunities  for  influence  were  in  the  nature  of  trusts,  to  be 
administered  for  the  benefit  of  humanity,  rather  than  for  the  promotion  of 


AN    EXTRAORDINARY    HISTORY.  269 

strictly  personal  interests  ;  or  which,  in  accordance  with  such  a  principle, 
has  linked  its  name,  by  so  many  substantial  tokens,  to  so  many  religious, 
educational,  patriotic,  industrial,  or  commercial  enterprises.  And  yet,  this 
was  the  firm  and  these  were  the  men  against  whom,  in  the  year  1873,  the 
whole  power  of  the  Federal  Government  and  no  small  share  of  public 
opinion,  seem  for  a  time  to  be  actively  enlisted  for  the  twofold  purpose  of 
crushing  and  dishonoring. 

The  remote  inception  of  this  affair  can,  undoubtedly,  be  traced  buck  as 
far  as  the  year  1871,  when  Mr.  William  E.  Dodge,  senior,  then  President  of 
the  New  York  Chamber  of  Commerce,  went,  on  invitation,  before  a  joint 
select  Committee  of  Congress  and  gave  testimony  very  disparaging  to  the 
manner  in  which  the  business  of  the  New  York  Custom  House  was  admin- 
istered.*    This  testimony  was  the  occasion  of  much  offence,  at  the  time,  to 

*  The  following  is  substantially  that  portion  of  the  testimony  of  Mr.  Dodge,  given  before  the 
Congressional  Committee,  which  was  regarded  by  the  Federal  officials  connected  with  the 
Custom  House  as  jiarticularly  damaging  and  offensive  : 

Committee. — Q.  Do  you  think  that  the  present  system  tends  to  induce  fraud  and  corruption 
in  the  employes  ?    Mr  Dodge. — A.  I  do ;  I  have  no  hesitation  in  saying  so. 

Q.  Have  you  good  reason  to  believe  that  there  are  fraudulent  transactions  generally  in  the 
collection  of  the  revenues  hero  ?  A.  I  am  not  sufficiently  informed  to  give  an  opinion ;  I 
have  no  hesitation  in  saying  this :  that,  from  the  standard  of  character  in  the  Custom  House, 
I  would  not  take  the  average  employes  into  ray  store,  under  any  consideration,  or  trust  them 
with  my  business  at  all. 

Q.  By  character  do  you  mean  business  or  moral  character  ?  A.  I  mean  moral  character 
and  business  qualilications,  both. 

**♦♦*****  * 

Q.  How  does  the  present  system  of  appointment  to  Custom  House  places  affect  the 
commercial  interests  of  New  York  and  the  country  ?  A.  My  impression  is,  that  if  character 
and  qualifications  were  the  standard  of  employes  in  the  Custom  House,  that  two  thirds  of 
the  number  now  paid  by  the  Government  would  do  all  the  business  better  than  it  is  done 
now. 

Q,  And  as  to  expense  ?  A.  Equally  as  cheap.  It  cannot  fail  to  be  a  charge  on  the  com- 
merce of  New  York  to  have  its  Custom  House  a  hospital  for  broken  down  politicians.  That 
is  just  what  it  is.  There  is  no  use  in  talking  about  it ;.  that  is  just  what  it  is.  There  are 
men  there — hundreds  of  them — that  I  would  not  allow  to  come  in  my  office  if  they  would 
come  for  nothing.  I  would  not  trust  them  in  my  store  to  have  anything  to  do  with  my 
goods.  They  are  broken  down  politicians,  skilled  only  in  political  manipulations.  For 
rapidity  and  correctness  iu  performing  the  business,  and  the  intricate  calculations  necessary 
in  the  Custom  Hou3e,^a  man  should  learn  and  understand  it,  and  get  the  facilities.  In  our 
house  we  train  men  for  particular  branches  of  business,  and  have  clerks  who  have  been  at 
the  same  desk  for  twenty  and  thirty  years.  A  man  who  has  been  in  the  Custom  House  for 
ten  years  knows  how  to  do  the  business,  where  to  find  the  necessary  papers,  etc.  In  his 
place  there  comes  a  stupid,  drunken,  broken  down,  swearing  fellow,  whom  you  have  to  tell 
how  to  do  his  business,  and  show  where  to  find  the  papers,  etc. — Report  of  1871,  pp.  45,  46, 
47. 


270  CONGRESS    AND    PHELPS,    DODGE   &    CO. 

certain  parties,  who  conceived  that  their  official  conduct  was  thereby  pub- 
licly criticized  ;  and  subsequently  the  original  offence  was  further  deepened 
and  aggravated  by  the  reading,  in  the  course  of  a  debate  in  the  Senate  of 
the  United  States  (3d  Session,  41st  Congress,  1870-71),  of  an  extract  from 
a  private  letter,  written  by  Mr.  VV^.  E.  Dodge,  Jr.,  in  answer  to  inquiries 
put  to  him  by  a  senator,  touching  the  necessity  of  reform  in  the  same 
special  department  of  the  Civil  Service  of  the  Government.  The  extract 
from  the  letter  thus  referred  to  reads  as  follows  : 

There  are  throe  classes  of  clerks  in  the  New  York  Custom  House  on  whom  devolve 
its  working. 

PirsL — The  fewest  possible  number  of  older  clerks,  kept  as  experts,  from  the  sheer 
necessity  of  having  some  experienced  hands  to  attempt  the  guidance  of  official  routine. 
These  poor  fellows  are  kept  in  a  constant  state  of  terror,  never  able  to  iiiake  any  plans  for 
the  future  of  themselves  or  their  families :  never  knowing  when  their  instant  dismissal  may 
come.  They  are  obliged  to  consort  and  drink  with  the  political  hacks  placed  in  their  bureau  ; 
contribute  from  their  small  income  to  election  frauds,  witn  no  hope  of  advancement,  no 
stimulus  to  more  faithful  work,  no  provision  in  case  of  illness  or  old  age.  They  fear  to 
communicate  their  knowledge  of  details,  knowing  the  moment  it  is  learned  by  others  they  will 
lose  their  own  place.  They  are  obliged  to  invent  more  and  more  intricate  means  of  conduct- 
ing business  in  order  to  throw  a  mystery  about  their  work  and  preserve  their  own  importance. 
They  are  a  sad,  unhappy  set,  with  no  pride  or  ambition. 

Secondly. — A  small  class  composed  of  incapables  and  shiftless  persons,  who  have  never 
succeeded  in  anything,  and  never  will,  and  who  have  some  family  or  personal  hold  on  people 
of  large  political  influence.  These  are  puslied  into  the  customs  as  into  a  hospital  or  safe 
harbor.  They  do  very  little  work,  and  are  not  expected  to  do  anytliing  but  to  draw  their 
pay  with  exact  and  beautiful  regularity,  to  act  as  figure  heads  at  Ward  prunary  meetings,  and, 
in  a  feeble  and  helpless  way,  to  cheer  on  the  fortunes  of  the  particular  senator  to  whose 
skirts  their  friends  happen  to  hang. 

Thirdly. — The  large  class  forming  the  great  bulk  of  the  clerks,  filling  to  repletion  all  the 
old  departments,  and  for  whom  new  departments  are  made ;  this  class,  in  order  to  give 
positions  to  which  political  jugglers  rack  their  ingenuity  to  make  places,  invent  all  sorts  of 
intricacies  to  turn  simple  business  forms  into  problems  which  ordinary  minds  cannot  under- 
stand, so  that  some  who  have  done  the  party  service  can  have  a  desk  at  which  entries  can  be 
rechecked  and  examined  again  and  again  in  hopeless  confusion.  These  are  the  men  who 
liave  been  the  sly  workers  in  local  caucuses,  the  noisy  men  in  local  elections,  who  have 
worked  and  drank  for  years,  who  have  a  "  hold  "  upon  some  higher  officeholder,  or  Congress 
man  or  Senator,  and  must  be  provided  for.  For  this  reward  of  their  faithful  services  they 
have  looked  forward  for  a  long  weary  time,  and  they  must  make  the  most  of  it.  They 
cannot  expect  to  stay  long  in  their  offices,  and  their  duty  to  themselves  and  their  families, 
as  they  see  duty,  compels  them  to  make  the  most  they  can.  The  slightest  fitness  for  the 
post  or  adaptedness  to  the  work  is  not  thought  of  for  a  moment.  They  do  as  little  work  and 
get  the  most  they  can,  and  yet  they  are  not  happy.  Each  clerk  represents  a  dozen  but  equally 
deserving  but  disappointed  political  workers  who  had  tried  for  the  same  place,  and  are 
constantly  plotting  to  undermine  him.  In  old  times  a  man  had  a  fair  chance  to  hold  through 
the  Administration,  but  now  his  tenure  is  only  good  until  the  "  friends  "  of  the  "  other 
Senator"  get  the  upper  hand.  The  chaos  and  confusion  growing  out  of  such  working 
materials  can  be  easily  understood,  especially  when  you  add  the  fact  that  the  collector  is 


AN    EXTRAORDINARY    HISTORY.  271 

expected  to  use  most  of  his  time  in  political  manuoeiivring,  and  the  tariff  under  which  they 
act  is  now,  with  the  various  rulings  under  it,  the  most  complicated  ever  known,  and  the 
system  of  drawbacks  intricate  beyond  description. 

Can  you  wonder  that  the  voters  of  the  Republican  party,  who  are  for  the  most  part 
among  the  thoughtful  and  intelligent  people,  lose  their  confidence  in  an  administration  which, 
in  a  time  of  debt  and  depression,  allows  the  most  vital  points  of  its  financial  machinery  to  be 
used  for  the  gain  and  for  the  squabbles  of  low  politicians,  who  in  any  other  sphere  would  not 
be  trusted  a  moment." — Appendix  to  the  Globe,  part  3d — 'id  Session  Alst  Congress,  1870-71, 
p.  56. 

The  warrant  for  the  hypothesis  that  the  testimony  thus  given  by  Messr?. 
William  E.  Dodge,  senior  and  junior,  to  members  of  the  Congressional  In- 
vestigating Committee,  in  1870-71,  had  more  or  less  of  connection  with  arid 
bearing  upon  the  proceedings  subsequently  instituted  against  the  firm 
of  Phelps,  Dodge  &  Co.  by  the  same  Custom  House  officials  whose  con- 
duct was  criticised,  is  to  be  found  in  the  circumstance  that  threats  were 
openly  and  repeatedly  made  at  the  time  by  persons  connected  with  the 
Government  against  the  firm  for  the  course  which  they  had  taken  ;  and 
that  the  members  of  the  firm  were  also  repeatedly  warned  by  friends  occu- 
pying positions  affording  opportunities  for  obtaining  information,  that 
punishment  would  be  inflicted  in  retaliation,  against  their  House,  for  the 
testimony  of  its  members,  in  case  a  favorable  opportunity  for  so  doing 
should  be  afforded.  In  answer  to  an  inquiry  on  this  subject,  a  member  of 
the  Custom  House  Investigating  Committee,  on  the  part  of  the  Senate  of 
the  United  States  in  1870-71,  who  was,  perhaps,  more  conversant  with 
the  whole  business  at  the  time  than  any  other  member  of  Congress,  also 
writes,  under  date  of  February  20th,  1875,  as  follows  : 

**This  letter  (the  one  of  W.  E.  Dodge,  Jr.,  referred  to)  and  the  testi- 
mony of  Mr.  Dodge,  I  cannot  doubt,  have  been  the  cause  of  his  subsequent 
troubles. 

"The  same  men  (whose  official  conduct  was  criticised  in  the  testimony 
and  letter)  set  spies  upon  them,  and  took  advantage  of  acts  of  which 
they  were  ignorant  and  innocent  to  compass  their  revenge.  In  addi- 
tion to  this,  they  furnished  an  opportunity  to  strike  at  the  integrit}/  of 
professedly  Christian  merchants.  How  could  such  an  opportunity*^  be 
lost  ?     What  right  has  a  Christian  to  enterprise  or  thrift?" 

Whether  the  views  thus  expressed  are  in  all  respects  warranted  may  be 
a  question.  The  presumptions  are,  however,  all  in  favor  of  their  correct- 
ness ;  but  whether  they  are  or  are  not  warranted,  the  opportunity  for  re- 
taliation and  persecution,  to  those  who  undoubtedly  desired  it,  even  if 
they  did  not  actively  seek  it,  soon  presented  itself  ;  and  the  method  of  its 
origination  and  the  incidents  of  romance  and  rascality  connected  With 
its  working  up  and  development,  constitute  a  chapter  alike  in  real  life  and 


272  CONGRESS   AND    PHELPS,    DODGE   &    CO. 

mercantile  history  for  wliich  it  would  be  most  difficult  to  find  a  parallel. 
What  constituted  this  opportunity,  and  what  were  these  incidents,  it  is 
next  in  the  order  of  this  narrative  to  relate. 

As  already  remarked,  the  business  transactions  in  metals  of  the  firm  of 
Phelps,  Dodge  &  Co.  are  of  great  magnitude.  It  should  also  be  added,  that 
these  transactions  are  not  confined  to  the  territorial  limits  of  the  United 
States.  And  it  accordingly  happened  that  during  the  early  summer  of  1872 
negotiations  were  commenced  by  the  firm  with  certain  large  manufacturers 
in  Russia  for  the  purchase,  for  a  terra  of  years,  of  the  entire  annual  pro- 
duct of  a  specialty  of  metal  fabrication.  As  the  project,  furthermore,  from 
the  amount  of  capital  and  liability  involved,  was  one  of  no  little  risk  and  of 
great  importance,  the  entire  discussions  and  correspondence  relative  to  it 
were  made  in  the  highest  degree  confidential,  and,  at  the  proper  time,  a 
member  of  the  firm  was  sent  to  Europe  in  order  to  perfect  and  complete  the 
arrangements.  But  the  steamer  which  bore  him  had  hardly  taken  its  de- 
parture when  the  firm  was  waited  upon  by  a  competitor  in  business,  who, 
after  making  known  his  acquaintance  with  the  proposed  contract  and  its 
conditions,  as  well  as  the  sailing  of  the  partner  referred  to,  preferred  a  de- 
mand for  participation  for  himself  and  others  in  the  enterprise,  accompany- 
ing it  at  the  same  time  with  a  threat  that,  unless  the  terms  were  accepted, 
"he  would  burst  the  whole  business."  It  is  only  necessary  to  say  that 
the  demand  was  at  once  resented,  and  its  author  treated  as  he  deserved. 
But  the  revelation  that  what  were  supposed  to  be  business  secrets  in  the 
firm  had  become  known,  and  the  further  fact  that  an  attempt  was  subse- 
quently made  in  Europe  to  make  good  the  threat  uttered,  led  to  an  inves- 
tigation, when  it  was  ascertained  that  for  some  time  previous  it  had  been 
the  practice  of  certain  reputed  respectable  New  York  metal  brokers  and 
merchants  to  visit  the  store  of  Phelps,  Dodge  &  Co.  secretly,  and  at  night, 
for  the  purpose  of  inspecting  their  letter  books  and  invoices,  using  this 
information  in  their  own  business,  and  communicating  it  to  others  in  the 
same  trade.  This  arrangement  was  effected  and  carried  out  by  the  direct 
bribery  and  purchase  of  certain  dishonest  clerks  and  watchmen,  who,  in 
the  first  instance,  acting  in  accordance  with  instructions  received  from  the 
outside  parties,  kept  back  and  secreted  the  books,  which,  at  the  close  of 
each  day's  business,  it  was  their  duty  to  deposit  and  lock  up  in  the  safes  ; 
and,  secondly,  at  a  late  hour  of  the  night,  when  all  the  partners  and  the 
honest  clerks  had  retired  to  their  homes,  unlocked  the  doors  of  the  store 
and  the  counting  rooms,  and  gave  free  admission  to  their  co-conspirators 
to  the  premises. 

An  arrest  and  prosecution  of  at  least  one  of  the  principals  concerned  in 
these  disgraceful    transactions   immediately  followed.     On    the    trial   the 


AN    EXTRAORDINARY    HISTORY.  273 

guilt  was  fully  proved,  but  the  jury  disngreed  as  to  whether  the  crime 
was  burglary  or  larceny.  But  in  the  course  of  the  trial  it  came  to 
light  that  among  the  employes  who  had  been  guilty,  from  mercenary 
motives,  of  betraying  the  trust  confided  to  them,  was  a  clerk  who,  to  the 
sin  of  dishonesty,  added  the  deeper  one  ot  ingratitude.  This  man,  a  Creole 
Frenchman  or  Spaniard,  of  supposed  West  India  origin,  had  been  given 
employment  in  the  outset,  when  not  needed,  by  a  member  of  the  firm, 
simply  out  of  compassion  for  his  utter  poverty  and  friendliness — and  had 
subsequently  been  educated,  promoted  on  a  liberal  salary  to  the  position  of 
assistant  invoice  clerk,  and  even  retained  in  position  when  ill  health  had 
almost  entirely  incapacitated  him  from  any  useful  and  efficient  service. 
This  rascal — for  such  is  the  only  proper  term  that  can  be  applied  to  him  j 
who,  by  the  way,  it  should  be  stated  had  gained  admission  to  the  store  at 
night  under  the  plea  of  serving  his  employers  by  bringing  up  his  arrears 
of  copying — foreseeing  as  the  result  of  the  legal  investigation  that  his  own 
dismissal  from  employment  would  be  one  certain  issue,  took  immediate 
steps  to  secure  himself  against  any  contingent  detriment  by  assuming  the 
role  of  an  informer  ;  and  having,  in  his  capacity  as  assistant  clerk,  become 
acquainted  with  certain  invoice  irregularities,  in  place,  as  was  his  duty,  of 
informing  his  employers,  stole  the  documents  in  question  and  put  him- 
self in  communication  with  the  Custom  House  officials. 

As  to  the  manner  in  which  he  operated  to  make  his  stolen  capital  avail- 
able, it  is  sufficient  to  say  that  men  of  high  standing  in  the  legal  profession 
were  only  too  ready  to  engage,  for  a  share  in  the  spoils,  in  the  work  of  hunt- 
ing down  an  old  and  leading  firm  of  New  York  merchants,  and  by  such  the 
case  was  worked  up  imd  placed  in  the  hands  of  the  Custom  House  detectives. 

Such,  then,  is  a  succinct  history  of  the  events  that  preceded  the  initia- 
tion of  proceedings  on  the  pare  of  the  Government  of  the  United  States, 
through  its  agents,  against  the  firm  of  Phelps,  Dodge  &  Co.,  for  alleged 
violations  of  the  laws  for  the  assessment  and  collection  of  the  customs 
revenues  ;  and  although  the  events  in  question  have  become  matters  of  the 
past,  and  in  the  whirl  and  rush  of  busy  life  have  already  become  almost 
forgotten,  yet  it  is  worth  while  to  here  reuewedly  bring  them  before  the 
public,  and  in  the  same  connection  to  put  this  question — How  long  a  com- 
munity which  tolerates  such  a  dry  rot  of  all  manliness  as  is  involved  in  the 
above  record,  and  kindly  allows  the  mantle  of  oblivion  to  fall  on  the  actors 
in  such  contemptible  transactions,  can  legitimately  profess  to  be  moral,  or 
even  civilized?  Or,  in  the  face  of  such  precedents,  what  probability  is 
there  of  New  York  City  speedily  becoming  the  commercial  centre  of  the 
world's  exchanges,  ihe  continued  recipient  of  foreign  capital,  or  an 
entrepot  of  the  commerce  of  all  nations? 

18 


274  CONGRESS   AND   PHELPS,    DODGE   &   CO. 

The  foundations  of  the  case  having  been  thus  laid,  it  might  naturally 
have  been  presumed  that  the  Government,  in  taking  charge  of  future  pro- 
ceedings, would,  on  account  of  the  magnitude  of  the  issues  involved,  have, 
before  making  public  accusation,  at  least  aflforded  through  the  collector,  aa 
chief  revenue  official  of  the  port,  reasonable  opportunity  for  the  parties 
suspected  to  know  whereof  they  were  charged,  and  to  present  in  private 
any  explanation  which  they  might  have  to  oflfer. ;  and  this  more  especially 
when  it  might  have  b^en  remembered  that  the  firm  about  to  be  arraigned 
had,  through  its  long  business  existence,  paid  into  the  Federal  Treasury,  on 
account  of  customs  duties,  a  sum  in  excess  of  fifty  million  of  dollars,  withr 
out  any  previous  ofi'ence,  controversy  or  pretence  of  irregularity,  and 
without  so  much  as  a  shadow  of  an  imputation  on  its  integrity.  Such, 
however,  was  not  the  course  followed  ;  but,  on  the  contrary,  every  posr 
sible  precaution  was  taken  to  prevent  any  information  coming  to  the  firm 
in  respect  to  the  proceedings  contemplated  against  them,  until  the  proper 
time  having  arrived,  they  were  summoned,  not  to  the  office  of  the  Collector^ 
but,  to  use  the  language  of  Mr.  Dodge,  senior,  before  the  Committee  of 
Ways  and  Means,  "to  a  little  dark  hole,  lighted  by  gas,"  in  the  basement 
of  the  Custom  House,  and  there  confronted  with  the  chief  of  the  detective 
service,  whose  portrait  and  customary  surroundings  were  thus  graphically 
described  by  Hon.  James  B.  Beck,  of  Kentucky,  in  his  speech  on  this  sub- 
ject before  the  House  of  Representatives  : 

"  This  picture,  Mr.  Speaker,  needs  no  filling  up.  It  stands  out  on  the 
canvas.  The  detective  toying  with  handcuffs,  putting  them  on  his  own 
wrists,  to  let  the  doomed  man  see  how  they  worked;  telling  his  victim  what 
a  wicked  fellow  he  had  been;  holding  up  to  him  the  terrors  of  the  law; 
changing  his  tactics  according  to  the  subjects  with  which  he  had  to  deal; 
urging  frank  confession  as  the  safest  and  best  course,  furnishes  such  a  por- 
trait of  the  prostitution  of  every  principle  of  justice  and  law  that  it  disgusts 
a  man  to  think  of  the  scene." 

The  summons  to  the  place  described  having  been  responded  to,  the 
head  detective,  Mr.  Jayne,  whose  portrait  and  usual  method  of  proceeding 
have  been  above  depicted  by  Mr.  Beck,  opened  the  case  by  informing  the 
representatives  of  the  firm  (Mr.  Dodge,  then  President  of  the  N.  Y.  Chamber 
of  Commerce,  and  Mr.  James)  that  they  and  their  associates  had  been  for 
years  engaged  in  deliberate  attempts  to  defraud  the  revenues;  that  they 
had  systematically  committed  perjury,  and  had  repeatedly  made  use  of 
false  and  fraudulent  invoices,  and  that  the  penalty  for  each  of  the  offences 
specified,  which  involved  perjury,  was  two  years'  imprisonment,  a  fine  of 
five  thousand  dollars,  and  a  forfeiture  of  all  the  merchandise  thus  irregu- 
larly imported.     And  although  Mr.  Jayne  declared  that  the  Government 


AN    EXTRAORDINARY    HISTORY.  275 

had  full  evidence  to  sustain  all  that  he  had  charged,  he  nevertheless  con- 
cluded by  demanding  of  the  firm  that  they  should  surrender  unreservedly 
their  private  books  and  papers,  and,  at  the  same  time,  exhibiting  a  warrant 
obtained  from  the  U.  S.  District  Court,  authorizing  him  or  his  deputies  to 
search  for  tlie  same,  and,  wlien  found,  to  seize  and  take  possession. 

Of  course,  charges  of  this  nature,  involving  loss  of  merchandise,  credit, 
personal  reputation  and  degradation,  coming  thus  unexpectedly,  fell  upon 
the  representatives  of  the  firm  like  a  thunderbolt  from  a  clear  sky.  They 
were,  however,  at  once  met  with  an  unqualified  demand  and  challenge  of 
proof,  and,  conscious  of  entire  innocence,  the  offer  was  also  immediately 
made  by  Mr.  Dodge  and  his  associates  to  waive  all  service  of  the  warrant, 
and  to  place  all  books,  papers  and  facilities  freely  at  the  disposition  of  the 
officials  for  the  purpose  of  investigation.  The  offer  being  accepted,  Mr. 
Jayne,  with  a  retinue  of  deputies,  next  repaired  to  the  store  of  the  firm, 
where,  producing  a  list  of  what  he  wanted — invoice  books,  cash  books, 
letter  books  and  papers  (all  carefully  prepared  for  him  by  the  dishonest  and 
discharged  clerk) — possession  was  ostentatiously  taken  of  the  same,  and,  on 
a  cart  backed  up  to  the  front  door,  they  were  loaded  and  carried  away. 

All  records  of  the  business  transactions  of  the  house  being  thus  placed 
beyond  the  control  of  its  representatives,  and  the  most  formidable  obstacles 
in  the  way  of  tiie  establishment  of  their  innocence  being  thus  at  the  same 
time  created,  the  next  step  was  to  proclaim,  through  the  press,  the  guilt  of 
the  firm,  and  to  so  magnify  the  case  as  to  make  settlement  on  easy  terms, 
which  the  detectives  and  informers  might  offer,  or  absolute  ruin,  the  only 
now  possible  alternatives.  And  this  was  done  so  thoroughly  and  so 
systematically,  and  before  any  adequate  opportunity  could  be  afi'orded  for 
the  parties  accused  to  offer  anything  in  the  way  of  defence  or  explanation, 
that  the  great  mass  of  the  public  were  for  a  time  almost  persuaded  that  the 
accusations  and  rumors  in  question  must  have  some  real  and  truthful  foun- 
dation ;  the  work  of  disseminating  calumny  and  defamation  being  nearly 
equally  participated  in  by  the  officials,  who,  under  the  then  existing  system 
of  moieties,  expected  to  share  in  the  future  plunder  of  the  rich  firm;  and  by 
the  principals  or  sympathisers  of  the  association  of  business  rivals,  who,  in 
the  manner  before  described,  had  contrived  to  enter  surreptitiously  and  at 
night  the  premises  of  the  firm,  and  rob  them  of  what  was  equivalent  to 
wealth — namely,  the  secrets  of  their  most  important  commercial  trans- 
actions. 

It  is  said  of  some  animals  that,  when  one  of  their  number  is  wounded, 
the  remainder  make  the  misfortunes  of  their  comrade  a  signal  and  an  occa- 
sion for  turning  upon  and  devouring  him.  That  a  propensity  something  akin 
to  this  exists  also  among  men,  would  seem  to  find  proof  in  the  circumstance 


276  CONGRESS    AND    PHELPS,    DODGE   &   CO. 

that,  as  soon  as  the  firm  were  arraigned  before  the  public  by  the  press,  at 
that  same  moment  tliey  began  to  be  the  continual  recipients  of  all  manner  of 
anonymous  and  abusive  letters  ;  the  fact  that  one  member  of  the  firm  was 
President  of  the  Young  Men's  Christian  Association,  and  that  others  had 
been  prominent  in  the  Presidental  canvass  the  preceding  year,  or  had  been 
positive  and  open  in  expressing  their  opinions  on  the  subject  of  temperance, 
or  the  Sunday  laws,  seeming  in  many  instances  to  furnish  the  animus  for 
the  piculiar  attacks  referred  to,  rather  than  the  existence  of  any  difficulty 
with  the  Government.  In  one  instance  an  editor  of  a  religious  journal 
wrote  that  he  had  become  convinced,  from  what  he  had  seen  in  the  papers, 
that  much  or  all  of  the  property  of  the  firm  had  been  acquired  dishonestly; 
and  that,  therefore,  he  should  feel  bound  to  recommend  to  all  of  his 
brethren  who  had  received  aid  from  the  members  of  the  firm,  in  behalf  of 
religious,  charitable,  and  educational  objects,  to  forthwith  return  the  same, 
saying,  as  Peter  said  to  Simon  the  sorcerer,  "  Thy  money  perish  with  thee." 
It  is  safe  to  say  that  if  the  advice,  which  the  writer  felt  it  thus  incumbent 
on  his  conscience  to  offer,  was  in  reality  ever  given,  it  was  never  adopted 
by  those  who  received  it,  and  of  the  tens  of  thousands  which  had,  as  indi- 
cated, been  given,  not  one  dollar  for  any  cause  ever  came  back  to  the 
donors.  As  time  went  on  it  was  further  found  that  the  members  of  the 
firm  were  under  constant  surveillance.  Letters  came  through  the  mails 
having  all  the  appearance  of  having  been  opened  or  tampered  with  ;  and 
in  at  least  one  instance,  the  contents  of  letters  written  to  Europe  were 
substantially  communicated  to  one  of  the  legal  advisers  of  the  firm  before 
the  letter  could  possibly  have  reached  its  destination.  Suspicion  being  thus 
aroused,  a  watch  was  set,  and  an  employe,  supposed  to  be  faithful,  was 
at  once  detected  in  opening  and  destroying  the  contents  of  a  letter  intrusted 
to  him  for  delivery  at  the  post-office  ;  the  torn  fragments,  which  happened 
to  be  of  no  consequence,  being  so  carefully  collected  by  the  detective  from 
the  street,  as  to  admit  of  the  entire  reconstruction  of  what  was  written  in 
the  unimportant  missive.  Speaking  of  the  espionage  by  which  the  firm 
at  this  time  had  reason  to  believe  themselves  to  be  surrounded,  Mr. William 
E.  Dodge,  senior,  in  his  remarks  before  the  Committee  of  Ways  and  Means, 
also  said  : 

"  We  found  ourselves  dogged  by  spies  every  step  that  we  took.  We  could  not  have  a 
meeting  of  our  partners  in  one  of  our  dwelHngs  at  night .  without  it  being  known  in  that 
dark  hole  the  next  morning.  We  could  not  do  anything  at  our  store  without  its  being  known ; 
we  could  not  have  our  partners  or  our  lawyers  in  our  private  office  without  its  being  known. 
I  will  relate  an  instance  of  this :  my  partner,  older  than  myself,  has  been  in  the  habit,  for 
twenty  years,  as  January  came  round,  of  opening  his  desk  and  clearing  it  out,  some  rainy 
day,  of  the  accumulation  of  papers  which  it  contained,  throwing  them  on  the  floor,  and 
having  a  boy  put  them  in  the  fire  and  burn  them.     He  did  so  on  the  8th  or  10th  of  January, 


AN    EXTRAORDINARY    HISTORY.  277 

and  within  a  half  an  hour  we  received  a  letter  from  our  attorney  to  come  quickly  to  his  oflBco 
"We  went  up  there,  and  he  said.  '  What  in  the  world  is  the  matter  ?  Jayne  is  tearing  aboii  t 
in  a  terrible  way.  He  says  that  Phelps,  Dodge  &  Co.  are  burning  their  papers,  and  that  he 
will  have  every  one  of  them  in  Ludiow  street  jail  before  night.'  How  did  he  know  it?  How- 
did  he  know  that  these  papers  were  burned  up?  Because  he  paid  a  man  in  our  store  to  gi\  e 
him  information.  He  had  our  second  book-keeper  in  his  employment.  What  he  paid  him  I 
do  not  know,  but  that  he  was  in  his  employment  I  do  know.  Wo  traced  that  fellow  and 
turned  liim  out  of  our  store.  And  where  did  he  go  when  he  was  turned  out?  Whore  should 
he  go?  He  went  where  he  was  employed.  And  where  is  he  to-day?  He  is  clerk  in  tlie 
Post-office,  in  the  money  department — a  place  obtained  for  him  by  the  special  agent  of  the 
United  States." 

One  instance  more  of  the  extraordinary  and  scandalous  elements  that 
were  invoked  in  the  course  of  these  transactions,  for  the  purpo.se  of  per- 
secution and  intimidation,  may  also  be  cited.  Pending  the  ultimate  settle- 
ment of  the  case,  as  made  up  against  the  firm  by  the  officials  of  the  Federal 
Government,  it  came  out  that  there  was  in  the  possession  of  the  legal 
counsel  retained  by  the  dishonest  clerk  and  informer  a  package  of  letters — 
wholly  relating  to  private  or  social  matters,  and  having  no  connection  what- 
ever with  the  matters  at  issue — which  had  been  stolen  from  the  desk  of  one 
of  the  junior  members  of  the  firm,  either  by  the  clerk  referred  to  or  by  the 
persons  who,  under  his  auspices  in  part,  had  been  in  the  habit  of  runimng. 
ing  the  store  of  the  firm  at  midnight.  The  control  of  these  letters  was  from 
the  outset  made  no  secret ;  nay,  more,  they  were  spoken  of  unblushingly, 
from  the  very  first,  as  an  agency  by  which  money  was  to  be  extorted;  and 
the  members  of  the  firm  and  their  legal  advisers  were  distinctly  notifad 
that  if  the  terms  of  settlement  to  be  dictated  by  the  moiety  hunters  and 
informers  were  not  promptly  acceded  to,  that  then  the  letters  Should  be 
immediately  made  public. 

If  this  statement  seems  to  the  reader  too  monstrous  for  belief,  he  is  re- 
spectfully referred  to  the  testimony  of  B.  G.  Jayne,  and  also  to  an  article 
from  the  N.  Y.  Graphic,  given  on  pages  62  and  63  of  this  volume.  And,  as 
further  illustrating  the  mental  idiosyncracies  of  the  men  who,  under  a  free 
and  republican  form  of  government,  follow  the  trade  of  the  spy  and 
informer,  it  is  to  be  noted  that,  when  Jayne  was  before  the  Congressional 
Committee  of  Ways  and  Means,  he  claimed  that  it  was  a  matter  specially 
to  his  credit  that,  after  the  letters  in  question  had  been  used  sufticiently 
long  as  agencies  of  annoyance,  he  finally  interfered  to  prevent  their  publica- 
tion, and  that,  after  they  had  been  read  by  Gen.  Butler  and  otliers,  he 
compelled  their  restitution  to  the  person  from  whom  he  knew  they  had  been 
stolen  ;  a  claim  just  as  legitimate  as  would  be  that  of  a  grand  inquisitor  to 
the  attribute  of  mercy,  on  the  ground  that  he  always  strangled  his  victims 
before  roasting  their  bodies. 


278  CONGRESS   AND   PHELPS,    DODGE   &    CO. 

And  all  this  terrible  and  unscrupulous  use  of  power,  it  may  be  further 
added,  not  for  the  purpose  of  vindicating  and  sustaining  the  law — for,  as  it 
was  ultimately  and  satisfactorily  shown,  the  offences  committed  were 
merely  technical  and  insignificant-^but  simply  and  purely  to  extort  money 
from  a  firm  which  was  known  to  value  their  good  name  and  reputation  as 
something  above  money,  and,  therefore,  in  the  slang  parlance  of  the  ring, 
could  be  made  "  to  bleed  freely." 

Meantime,  the  examination  of  the  books  and  papers  removed  from  the 
store  to  the  Custom  House  went  on  under  the  personal  supervision  of  the 
detectives  whose  pecuniary  interest  it  was  to  allow  no  irregularity  to  escape 
them — aided  also  by  the  dishonest  and  discharged  clerk,  whose  acquaint" 
ance  and  familiarity  with  the  books,  while  in  the  employ  of  the  firm,  was 
made  the  basis  of  the  information  on  which  the  federal  officials  originally 
commenced  proceedings.  A  pro  forma  suit  against  the  firm  for  a  million  of 
dollars  having  been  also  instituted,  the  idea  for  a  time  became  current  with 
the  public  that  this  sum  represented  the  amount  by  which  the  Government 
had  been  defrauded;  and  later,  when  a  compromise  or  settlement  had  been 
effected,  that  $271,000  was  the  correct  figure.  When,  ho^\  over,  the  results 
of  this  critical  and  minute  investigati-on  on  the  part  of  the  Government 
were  made  known  (which  was  not  until  after  the  firm  had  been  induced  to 
agree  to  a  settlement),  the  following  facts  were  found  to  have  been  estab- 
lished: 

1st.  The  range  of  investigation  entered  upon  covered  a  period  of  five  years 
of  business  transactions  by  the  firm  of  Phelps,  Dodge  &  Co. 

2d.  During  this  period  the  aggregate  invoice  value  of  the  merchandise 
imported  by  the  house  was  in  excess  of  $30,000,000,  on  which  the  duties 
paid  amounted  in  the  aggregate  to  between  six  millions  and  eight  millions 
of  dollars. 

3d.  Out  of  the  whole  number  of  invoices  representing  this  enormous 
importation  the  Government  selected  about  fifty,  which,  it  alleged,  were 
vitiated  by  reason  of  the  under  valuation  of  certain  items  embraced 
therein.     The  total  amount  of  these  invoices  was  $1,750,000. 

4th.  The  total  invoiced  value  of  the  items  claimed  to  have  been  under 
valued  was  $271,017.23. 

5th.  The  total  amount  by  which  these  several  items,  aggregating 
$271,000,  were  claimed  to  have  been  under  valued,  was  $6,658.78. 

6th.  The  total  amount  of  duties  claimed  to  be  lost  to  the  Government 
by  reason  of  such  under  valuation  was  ^1,664. 08. 

How  these  irregularities,  which  the  Government  was  pleased  to  term 
under  valuations,  occurred,  has  been  so  clearly  and  satisfactorily  set  forth  by 
Mr.  Dodge,  in  his  address  before  the  Committee  of  Ways  and  Means  of  the 


AN   EXTRAORDINARY    HISTORY.  2*79 

United  States  House  of  Representatives,  March,  1874  (see  pages  17-20), 
and  also  in  the  statement  made  by  the  firm  to  the  public  in  April,  1878, 
that  it  is  unnecessary  to  here  aj^ain  enter  into  a  minute  detail  of  explana- 
tions. But,  in  a  few  words,  they  may  be  stated  to  have  been  due  to  a 
neglect  on  the  part  of  the  invoice  and  shipping  clerks  in  Liverpool  to  make 
the  prices  of  certain  exceptional  artich'S  (unusual  sizes  of  tin  plate  of 
comparatively  small  value)  contracted  for,  months  in  advance  of  delivery 
and  shipment,  agree  with  the  market  prices  of  similar  articles  on  the  da}- 
when  the  invoices  were  prepared,  and  the  merchandise  placed  on  board 
the  vessels  for  transatlantic  transportation  ;  the  United  States  customs 
laws  and  regulations  requiring  that  goods  intended  for  importation  into 
the  United  States  shall  be  invoiced  at  their  market  value  at  the  time  and 
place  of  shipment,  while  in  actual  practice  it  is  the  rule  to  assess  the  duties 
on  market  value  only  when  it  is  in  excess  of  actual  cost,  but  on  actual  cost 
when  it  is  in  excess  of  market  value.  Now,  it  never  was  pretended  by  the 
agents  of  the  Government  that  this  rule  in  respect  to  market  value  had 
been  regularly  and  systematically  violated  by  Phelps,  Dodge  &  Co.  in 
their  importations,  but,  on  the  contrary,  it  was  admitted  that  the  cases 
in  which  any  irregularity  occurred  were  very  few,  wholly  exceptional,  and 
covering  but  a  very  small  amount  in  value.  Thus,  for  example,  in  one  of 
the.  vitiated  invoices  the  whole  amount  of  alleged  under  valuation  was 
$47.31  on  a  total  invoice  value  of  $22,318.81  ;  on  another,  $47.31  on  an 
invoice  aggregate  of  $17,316  ;  while  on  a  further  case  of  total  shipments  of 
the  invoiced  value  of  $167,536.18,  the  utmost  loss  claimed  by  the  Custom 
House  officials  to  have  been  experienced,  and  for  which  it  was  proposed 
to  confiscate  the  whole,  was  $162.23,  or  about  the  amount  of  wages  which 
the  firm  would  have  paid  during  the  same  time  to  the  head  porter,  or  to 
an  under  clerk. 

On  the  other  hand,  a  careful  examination  of  the  seized  books  and  paper.*, 
after  they  were  returned  by  the  Custom  House  authorities,  showed  that 
during  the  year  1872 — the  year  in  which  the  bulk  of  the  undervaluations 
were  charged  to  have  occurred,  and  which  was  a  year  of  great  fluctuations 
in  prices — the  firm,  in  their  anxiety  to  strictly  and  scrupulously  conform  to 
the  law,  had  so  often  and  so  largely  advanced  the  price  of  their  shipments 
over  actual  cost,  to  meet  the  temporary  requirement  for  market  value  by 
reason  of  such  fluctuations,  that  they  paid  to  the  Government  many  thou- 
sands of  dollars  more  than  they  would  have  been  required  to  do  had  the 
goods  been  invoiced  and  shipped  on  the  day  on  which  they  were  made  the 
subject  of  contract.  So  that,  while  in  reality  the  Government  cannot  right- 
fully claim  to  have  lost  a  dollar  through  the  importations  of  the  firm  of 
Phelps,  Dodge  &  Co.,  it  is  at  the  same  time  liable  to  the  just  imputation  of 


280  CONGRESS    AND    PHELPS,    DODGE   &    CO. 

having  taken  an  advantage  of  a  technicality  of  law  to  exact  many  thou- 
sands of  dollars  from  the  same  firm,  in  excess  of  what  it  could  have  taken 
had  the  law  been  framed  on  the  strict  principle  of  equity  and  common  mer- 
cantile fairness,  or  had  their  goods  in  all  instances  been  shipped  at  the  time 
they  were  actually  purchased. 

A  mere  plain  statement  of  the  case,  as  the  Government  ultimately  were 
obliged  to  state  it,  and  as  the  interested  partisans  of  the  Custom  House 
were  obliged  to  confess  it,  was  therefore  equivalent  to  a  reductio  ad  absur- 
dam,  and  was  almost  unanimously  so  accepted  by  the  public  the  moment 
the  public  clearly  understood  it. 

It  would  be,  moreover,  almost  impossible  to  find  a  more  striking  illustra- 
tion of  the  fickleness  of  that  great  arbiter  of  human  actions — public  opinion 
— than  the  following  sequence  of  occurrences.  In  December,  18*12,  suit  was 
commenced  against  the  firm  of  Phelps,  Dodge  &  Co.  by  Hon.  Noah  Davis, 
U.  S.  District  Attorney,  for  defrauding  the  customs  revenues.  In  January 
following  this  suit  w  as  discontinued  and  the  case  settled.  In  May,  the 
case  in  the  meantime  having  been  fully  explained,  the  merchants  of  New 
York  testified  to  their  opinion  by  unanimously  reelecting  Mr.  William  E. 
Dodge,  the  senior  partner  of  the  firm,  to  the  first  place  in  honor  in  their 
gift,  namely,  that  of  President  of  the  N.  Y.  Chamber  of  Commerce;  and  at 
the  annual  banquet  of  the  Chamber  the  next  year  (May  Tth,  1874,)  the  Pre- 
sident, having  the  former  District  Attorney  on  his  right,  with  immense 
applause  addressed  that  gentleman  in  the  following  language: 

"  We  had  anticipated  the  pleasure  of  having  our  highly  honored  Chief  Magistrate,  Gov. 
Dix,  respond  to  the  next  toast,  but  a  telegram  has  been  received  expressing  his  regret  that . 
the  pressure  of  public  duties  will  not  permit  him  to  be  present.  I  shall  ask  a  gentleman  to 
take  his  place  who  has  honorably  filled  many  high  positions  in  our  Stace,  and  has  recently 
commended  himself  to  the  esteem  of  our  best  citizens  by  his  honest  and  impartial  trials  and 
condemnations  of  the  men  who  had  so  long  plundered  our  city  government,  though  he  has 
also  secured  the  enmity  of  those  who  sympathized  with  their  crimes.  He  has  also  taken  a 
noble  stand  in  the  effort  to  secure  to  our  merchants  a  revision  of  our  revenue  laws.  I  will 
call  on  the  Hon.  Noah  Davis." 

Thus  called  upon,  the  former  prosecuting  official  of  the  Federal  Govern- 
ment responded  in  a  speech  from  which  the  following  is  an  extract: 

"You  have  alluded,  Mr.  President,  to  the  case  of  your  own  house.  There  is  an  old  saying 
among  lawyers  that  hard  cases  make  bad  laws.  That  is  true  of  the  decisions  of  courts.  But 
in  practical  life  hard  cases  make  good  laws,  for  tliey  arouse  the  attention  of  the  community 
to  evil  laws  and  compel  their  abrogation.  The  blood  of  the  martyr  is  the  seed  of  tlie  Church  I 
Not  unfortunate  will  it  prove  if  the  seed  from  which  springs  i-egonerated  laws  shall  be  found 
to  have  been  poured  out  in  the  blood  taken  from  your  veins.  Denounced  as  I  have  been  for 
having  certified,  solely  through  a  sense  of  justice,  that  while  doing  acts  which  were  clearly 
violations  of  the  law,  and  thus  subjecting  you  to  heavy  penalties,  you  and  your  house  were 


AN    EXTRAORDINARY    HISTORY.  281 

free,  in  my  opinion,  from  all  intention  of  defrauding  the  Government,  I  still  hold  to  that 
opinion  as  the  exact  demand  of  truth  and  justice  toward  yourself.  I  have  never,  on  any 
occasion  or  under  any  circumstances,  expressed  any  contrary  opinion." 

But  notwithstanding  the  result  to  which  the  critical  examination  of  the 
seized  books  and  papers  of  the  firm  had  led  the  Government,  the  suit  and 
the  proceedings  against  the  firm  were  not  discontinued;  but,  on  the  contrary 
— and  as  was  natural,  considering  the  motive  which  actuated  the  oflBcials 
interested — were  pressed  more  vigorously,  resulting  finally  in  a  corapromi.se 
between  the  Government  and  the  firm^  by  which  the  latter  paid  to  the 
former  the  sum  of  $271,017.23,  the  amount  of  the  several  items  said  to  have 
been  under  valued. 

Now,  why,  under  the  circumstances,  this  compromise  was  agreed  to  by 
the  firm  of  Phelps,  Dodge  &  Co.;  why  the  large  sum  indicated  was  paid  ; 
and  why  the  proceedings  commenced  in  the  United  States  courts  were  not 
allowed  to  run  to  a  judicial  conclusion,  has  ever  been  regarded  by  no  small 
part  of  the  public  as  one  of  the  most  extraordinary  and  unaccountable 
things  connected  with  this  whole  business.  The  matter,  however,  admits 
of  a  full  and  satisfactory  explanation,  and  to  this  explanation  it  is  now  pro- 
posed to  ask  attention. 

In  the  first  place,  it  must  be  borne  in  mind  that  the  facts  as  above  detailed, 
respecting  the  exact  manner  in  which  the  irregularities  on  which  the  Gov- 
ernment based  its  proceedings,  occurred,  and  the  comparatively  insignificant 
sum  which,  under  the  worst  hypothesi.<,  could  be  claimed  to  have  been  lost 
to  the  customs  revenues,  were  not  made  known  to  the  firm  or  to  the  public 
at  the  time  this  compromise  or  settlement  was  effected;  and,  for  the  most 
obvious  reasons,  it  was  never  intended  that  they  should  be  known  until  the 
largest  possible  sum  had  been  extorted  from  the  firm,  and  the  moiety  of  the 
plunder  allowed  by  law  had  been  divided  among  the  official  associates, 
lawyers,  spies,  detectives,  and  professional  informers.  The  books  and  papers 
of  the  house  were  in  the  close  possession  of  the  Custom  House  authorities. 
No  statement  of  specific  charges  were  ever  presented  by  the  officials,  and 
at  no  time  was  the  firm  ever  able  to  have  a  complete  list  of  the  invoices,  or 
the  items  of  the  invoices  in  respect  to  which  it  was  alleged  that  under 
valuations  had  occurred. 

And  at  any  examinations  of  the  books  and  papers  no  person  belong- 
ing to  the  firm,  or  in  any  way  representing  it,  was  ever  invited  to  present ; 
but,  at  the  same  time,  special  pains  were  taken  to  continually  represent  to 
the  public  through  the  press,  and  to  the  firm  by  private  conversation,  that 
the  case  was  a  most  atrocious  one,  without  any  mitigating  circumstances, 
and,  in  point  of  magnitude,  something  without  a  parallel  in  Custom  House 
experience.  ^ 


282  CONGRESS    AND    PHELPS,    DODGE   &    CO. 

Again,  under  a  strict  construction  of  the  laws  then  regulating  importa- 
tions, the  least  taint  in  any  item  of  any  invoice  subjected  not  only  the 
items  but  also  the  entire  invoice  to  confiscation,  even  though  the  under 
valuation  of  the  item  amounted  to  only  five  cents,  and  the  entire  valuation 
of  the  invoice  should  be  in  excess  of  a  half  a  million  ;  and  if  the  case  had 
been  carried  to  the  courts,  the  question  of  intent  to  defraud  was  not  one  for 
the  courts  to  consider,  but  was  a  matter  reserved  exclusively  for  the 
Secretary  of  the  Treasury  to  pass  upon,  if  application  following  judgment 
should  then  be  made  to  him  for  a  remission  of  penalties  ;  and  as  this  point 
is  most  important,  for  a  full  appreciation  of  the  situation  of  the  firm,  refer- 
ence is  here  again  made  to  Judge  Davis,  who,  in  his  speech  at  the  banquet 
of  the  Chamber  of  Commerce  before  referred  to,  laid  down  the  law  as  fol- 
lows : 

"  Where  an  act  forbidden  by  the  statute  is  knowingly  done,  though  in  ignorance  of  the 
law,  and  even  in  supposed  compliance  with  it,  if  a  loss  of  duties  is  the  result,  the  question 
of  actual  intent  to  defraud  is  not  important,  in  a  legal  sense,  until  the  case,  after  judgment, 
reaches  the  Secretary  of  the  Treasury  on  application  for  remission — which  he  is  only  per- 
mitted to  grant  whore  '  intentional  fraud '  or  '  wilful  negligence  '  have  not  occurred." 

To  enter  into  court  confessing  a  technical,  though  unintentional  viola- 
tion of  the  statute,  would  be,  therefore,  to  incur  the  risk,  or  rather  to  face 
the  certainty  of  a  pro  forma  decree  or  judgment  confiscating  the  entire 
value  of  all  the  invoices  which  contained  any  items  under  valued  to  even 
the  smallest  extent.  And  in  this  connection  it  is  important  to  recall  what 
has  already  been  stated,  that  the  value  of  these  several  invoices  amounted 
to  the  large  sum  of  $1,750,000;  and  the  value  of  the  several  items  embraced 
under  them,  which  were  claimed  to  be  under  valued  to  $271,017.38,  but 
that  on  these  items,  by  the  Government's  own  showing,  the  under  valua- 
tion, accruing  through  a  period  of  months,  was  only  $6,658.78,  and  the 
maximum  loss  of  duties,  $1,664.68  ;  no  allowance  being  made  for  duties 
overpaid  during  the  same  time  as  the  result  of  over  valuations. 

A  decree  or  judgment  of  the  court  confiscating  the  full  value  of  the 
invoices,  $1,750,000,  being  once  entered,  the  determination  as  to  whether 
the  judgment  should  be  enforced  in  whole  or  part  became  a  matter 
wholly  dependent  on  the  pleasure  or  arbitrary  will  of  the  Secretary  of  the 
Treasury.  In  most  countries — even  the  most  despotic — where  the  reputa- 
tion of  the  great  merchants  is  a  matter  of  pride  alike  to  governments  and 
people,  and  where  to  foster  the  reputation  and  business  of  great  com 
mercial  houses  is  regarded  as  equivalent  to  strengthening  national  resources 
and  national  revenues,  an  appeal  to  a  high  officer  of  state  invested  with  full 
powers,  under  such  circumstances  as  have  been  detailed,  for  an  abatement 


AN    EXTRAORDINARY    HISTORY.  283 

or  entire  remission  of  penalties  might  have  been  made  with  no  apprehen- 
sion as  to  the  nature  of  the  decision.  But  in  the  United  States,  which 
claims  to  possess  the  most  free  and  enlightened  of  all  forms  of  government, 
it  must  be  confessed  with  shame  and  mortification  that  the  situation  was 
such,  in  1872-3,  that  few,  if  any,  sagacious  merchants  could  be  found  to 
entertain  the  opinion  that,  in  an  appeal  to  the  Treasury,  in  a  confiscation 
case  involving  one  million  seven  hundred  and  fifty  thousand  dollars,  a  de- 
cision would  certainly  be  obtained  in  consonance  with  the  most  obvious 
principles  of  ordinary  fair  dealing  and  equity.  And  if  to  any  this  judg- 
ment may  seem  hursjh  and  unwarranted,  their  attention  is  asked  to  the 
following  circumstances: 

Soon  after  the  accusations  were  publicly  preferred  by  the  oflBcials  against 
the  firm  of  Phelps,  Dodge  &  Co.,  and  a  formal  prosecution  had  been  com- 
menced against  them  in  the  courts,  the  representatives  of  the  great  house 
repaired  to  Washington  to  present  their  case  to  the  federal  administration. 
Considering  the  former  high  standing  of  their  firm,  the  immense  amount 
previously  paid  by  them  to  the  Government  in  a  long  series  of  years  in  the 
form  of  duties,  without  any  dispute  or  controversy,  and  the  further  fact  that 
a  majority  of  the  individual  partners  of  the  house  were  not  only  politically 
allied  to  the  administration,  but  had  been  among  its  most  devoted  and 
substantial  supporters,  the  representatives  in  question,  in  their  diflBculties 
naturally  expected  a  sympathetic  and  generous  consideration.  But  this 
was  not  to  be.  Justice  at  Washington,  in  view  of  the  possibility  of  distrib- 
uting a  moiety  of  $1,750,000  among  some  eight  or  ten  prominent  ofiQce- 
holders  and  their  counsel,  was  never  less  inclined  to  be  tempered  with 
mercy;  and  while  the  cold  advice  was  given  not  to  compromise  and  settle 
with  the  Custom  House  officials,  but  to  refer  the  case  to  the  slow  action  of 
the  courts,  the  intimation  was  also  conveyed,  in  no  dubious  language,  that 
in  all  these  matters  the  Treasury  regarded  the  interests  of  the  Government 
and  the  interests  of  the  merchants  as  diametrically  opposed  to  each  other; 
as  if  there  could  be  one  interest  for  the  Government  and  another  for  the 
people,  or  as  if  it  was  the  correct  policy  of  the  Treasury  Department  to 
antagonize  itself  as  a  rule  with  the  great  business  interests  of  the  country 
and  their  legitimate  representatives. 

,  Take,  also,  another  fact.  At  the  very  outset  of  this  case,  or  as  soon  as  it 
became  apparent  to  the  Custom  House  officials  and  their  allies  that  a 
"placer"  had  been  struck^  rich  beyond  all  precedent  in  its  capacity  for 
plunder,  the  most  extraordinary  steps  were  taken  to  work  it  most  thoroughly. 
For  this  purpose  the  discharged  clerk  and  thie^  who  was  the  original  in- 
former (but  for  whose  name  in  the  "information  "  filed  the  name  of  B.  G. 
Jayne  was  substituted),  employed  three  lawyers  in  the  City  of  New  York, 


284  CONGRESS    AND    PHELPS,    DODGE   &    CO. 

all  men  of  ability,  but  in  whose  estimation,  their  acts  being  the  criterion, 
money  was  more  valuable  than  a  good  name.  In  illustration,  attention  is 
here  asked  to  the  following  extract  of  the  report  of  the  testimony  of  B.  G. 
Jayne,  when  under  investigation  before  the  Committee  of  Ways  and  Means, 
U.  S.  House  of  Representatives — Mr.  Sheldon,  of  Louisiana,  and  Mr.  Beck, 
of  Kentucky,  being  the  examiners  : 

Mr.  Sheldon. — "Who  was  the  money  given  to  ?     A.  It  was  awarded  to  me. 

Q.  By  the  Secretary  ?    A.  Yes,  sir. 

Q.  How  could  he  award  it  to  you  if  he  knew  the  other  man  was  the  informer  ?  A.  I 
reported  the  case,  and  there  was  no  adverse  claim.  It  belonged  to  me,  if  there  was  no  adverse 
claim  under  the  law. 

Mr.  Beck. — What  is  the  name  of  the  man,  and  what  is  the  name  of  his  attorney  ?  A.  The 
name  of  the  man  is  Charles  F.  Herve.  He  had  three  or  four  attorneys  and  counsel ;  they 
were  associated  together ;  I  do  not  know  in  what  way  or  in  what  form,  pr  anything  about 
that. 

Q.  Which  one  came  to  you  with  the  papers  ?  A.  Well,  sir,  I  think  there  were  two  of 
them  that  came  with  him  in  the  first  place. 

Q.  And  brought  the  papers  with  them  ?  A.  Yes,  sir.  Under  the  law  the  man  bringing 
the  information  to  my  office  was  entitled  to  one  fourth  of  the  net  proceeds,  no  matter  who 
works  up  the  case.  I  was  entitled  to  nothing  save  such  sum  as  they  would  voluntarily  pay 
me,  but  they  requested  that  I  should  put  the  case  in  my  name,  and  should  pay  them  two 
thirds  of  the  amount,  which  I  ^id. 

Q.  Did  these  lawyers,  or  any  of  them,  in  any  of  their  conversations  with  you,  tell  you,  or 
did  this  man  Herve  say  in  their  presence  that  he  had  obtained  these  papers  surreptitiously, 
or  stolen  them  from  the  books  ?  A.  He  never  told  me  how  he  came  bv  them,  and  I  never 
asked  him. 

Q.  Didn't  you  know  they  were  torn  out  of  their  books,  and  could  you  not  see  where  they 
were  torn  from  ?  A.  When  I  got  the  books  I  found  where  the  papers  I  had  matched  on.  It 
was  pretty  good  evidence  that  they  were  torn  out. 

Mr.  Beck. — The  lawyer  of  the  informer  brought  you  the  papers  ?     A.  Yes,  sir. 

Q.  And  you  presumed  they  were  stolen,  and  I  suppose  he  knew  it  ?  A.  It  is  not  my  duty 
to  presume  in  any  way.  The  law  makes  it  my  duty  to  ascertain  if  any  fraud  has  been  com- 
mitted ;  to  avail  myself  of  every  source  of  information. 

Q.  Would  the  courts  of  New  York  allow  a  lawyer  to  practice  at  their  bar  when  he  was  an 
attorney  of  a  man  known  to  be  a  thief,  and  dealing  with  stolen  papers?  A.  I  believe  the 
courts  of  New  York  and  every  State  in  this  Union  allows  attorneys  to  defend  thieves  and 
protect  them. 

Q.  But  do  they  allow  them  to  bring  suit  and  get  fees  out  of  the  proceeds  of  plunder  when 
they  themselves  have  been  the  agents  or  aiders  and  abettors  of  the  thieves  ?  A.  I  do  not  get 
the  exact  point  of  your  question.     Please  state  it  again. 

Q.  I  will  put  it  in  this  way :  Did  the  Secretary  of  the  Treasury  know,  when  he  paid  you 
that  money,  that  you  wore  to  give  two  thirds  of  it  to  the  thief  and  his  lawyer  ?  A.  The  Sec- 
retary of  the  Treasury  knew  that  I  presented  evidence,  and  I  told  him  the  whole  story  of  its 
source,  and  how  the  case  came  to  me,  and  all  about  it. 

Q.  And  knew  that  this  thief  and  his  lawyer  were  to  get  two  thirds  of  it  ?  A.  WeU,  you 
call  him  a  tiiief ;  yes,  sir. 


AN    EXTRAORDINARY    HISTORY.  285 

Q.  Yes,  sir ;  I  do  call  him  a  thief.  And  the  Secretary  of  the  Treasury  knew  that  he  was 
to  get  two  thirds  of  it,  and  he  paid  the  money?  A.  The  Secretary  of  tlie  Treasury  knew 
that  my  name  was  put  on  that  information 

Q.  Do  you  think  it  was  your  duty,  as  an  officer  of  the  United  States,  lo  communicate  tiiat 
fact  to  the  officer  who  was  to  pay  out  such  a  large  sum  of  money — the  fact  that  two  thirds 
of  the  portion  coming  to  you  was  to  go  to  a  man  and  a  lawyer,  one  of  whom  was  a  thief  and 
the  other  was  aiding  and  assistmg  a  thief?     A.  You  name  him  a  thief. 

Q.  I  will  ask  you  whether,  if  you  wore  to  raise  your  hand  to  heaven,  you  could  say 
you  did  not  believe,  and  had  information  upon  which  you  acted,  that  they  were  stolen 
papers  ?  A.  I  do  not  know  that  I  am  called  upon  to  say  whether  I  consider  it  a  theft  or 
not. 

The  informer  having  thus  provided  for  hia  prospective  interests  by  "  three 
or  four  counsel  associated,"  Mr.  Jayne,  the  head  detective,  to  malfe  sure 
of  securing  his  share  in  the  plunder,  next  retained  for  his  private  benefit 
the  professional  services  of  Honorable  ("heaven  save  the  mark  !")  Benjamin 
F.  Butler,  at  that  time  a  member  of  the  United  States  House  of  Repre- 
sentatives, and  leader  of  the  dominant  political  party,  and  whose  influence 
with  the  federal  administration  was  acknowledged  to  be  all  but  irresistible. 
As  one  fourth  of  the  penalties,  or  amount  of  confiscation  decided  upon 
(over  $400,000  in  case  the  full  value  of  the  invoices  were  taken,  or  some 
$60,000  if  it  should  be  only  the  aggregate  of  the  under  valued  items),  was 
to  accrue  to  the  Collector,  Naval  Officer,  and  Surveyor  of  the  Port,  these 
gentlemen  also  called  in  to  their  aid,  even  if  they  did  not  professionally 
retain  as  counsel,  one,  if  not  two  of  the  most  distinguished  and  influential 
leaders  of  the  party  of  the  administration  in  the  Senate  of  the  United  States. 
{See  pages  247-S,  Evidence  be/ore  the  CommiUee  of  Ways  and  Means,  42d 
Congress,  1st  Session,  Miss.  Doc.  264  ;  also,  pp.  165,  166,  this  volume.)  And 
in  addition  to  all  this  extraordinary  employment  of  agencies,  the  fact  that 
the  statute  gave  to  the  United  States  District  Attorney,  the  United  States 
Marshal,  and  the  Clerk  of  the  Court  a  percentage  on  the  amount  of  penal- 
ties to  be  adjudged,  or  oT  the  value  of  the  goods  to  be  confiscated,  obviously 
made  it  for  the  interest  of  all  those  officials  not  to  array  themselves  on  the 
side  of  leniency,  or  to  regard  the  case  from  any  other  than  the  most  un- 
favorable standpoint. 

It  was  also  well  known  at  this  time  that  the  then  incumbent  of  the 
office  of  Secretary  of  the  Treasury,  in  view  of  being  elected  to  the 
Senate,  was  not  likely  to  retain  his  office,  and  that,  therefore,  the  power  of 
deciding  how  far  a  judgment  of  the  court  predicated  on  the  strict  letter 
of  the  law,  and  without  reference  to  intent,  should  be  enforced,  would 
vest  exclusively  in  his  successor  ;  but  of  this  successor  nothing  could  be 
definitely  predicated,  other  than  that  he  was  likely  to  be  a  friend  of  the 
eminent  representatives  and  senators  who  had  been  retained  by  the  prose- 
cution. 


286  CONGRESS   AND   PHELPS,    DODGE   &   CO. 

Now,  whether  the  firm  of  Phelps,  Dodge  &  Co.  had  reasons  for  any 
apprehension  in  respect  to  this  chanj]^e  in  the  head  of  the  Treasury, 
nia}^  perhaps,  be  best  answered  by  recalling  the  fact  that  popular 
opinion  was  all  but  unanimous  in  ascribing,  a^ew  weeks  later,  the  nomi- 
nation of  a  new  Secretary  to  the  influence  of  Gen.  Butler  ;  and,  further- 
more, that  in  about  one  year  afterwards  this  same  Secretary,  under  the 
pressure  of  public  opinion,  found  it  expedient  to  resign  his  office,  by  rea- 
son of  the  disreputable  transactions  that  occurred  under  his  administra- 
tion, in  connection  with  the  so-called  Sanborn  contracts,  of  which  last 
Gen.  Butler  was  also  the  engineer  and  adviser. 

Nothing,  therefore,  could  be  more  pertinent  than  the  following  language, 
used  by  Mr.  Beck  in  his  speech  before  the  House  of  Representatives, 
descriptive  of  the  situation: 

"  It  requires  no  argument  to  prove  how  utterly  helpless  these  merchants  were  in  the  hands 
of  such  a  power,  stimulated  by  such  incentives  lo  fasten  guilt  upon  them.  No  one  of  these 
men  could  get  a  dollar  if  they  did  not  get  it  out  of  their  victims  ;  all  could  reap  a  rich  harvest 
if  they  could  by  any  means  force  them  to  yield  to  their  demands. 

With  such  an  array  of  ofiBcials  against  the  merchants,  what  was  an  appeal  to  the  Secretary- 
worth  ?  Every  officer  on  whom  he  could  rely  for  information  was  directly  and  largely  inter- 
ested in  having  the  highest  penalty  imposed.  The  leading  administration  Senator,  and  one 
of  the  ablest  Republican  members  of  this  House  were  their  advocates  and  attorneys.  What 
private  man  stood  any  chance  with  the  Secretary  under  such  circumstances?  What  Secre- 
tary, under  such  an  administration  as  this,  would  dare  to  oppose  such  a  combination  ?  Sir,  it 
was  apparent  from  the  first  that  they  had  to  pay  whatever  sum  they  were  told  wovild  satisfy 
the  rapacity  of  their  persecutors,  atid  they  paid  it.     Any  of  us  would  have  done  as  they  did," 

To  appreciate  fully  the  situation  of  the  firm  the  reader  should  also  bear 
in  mind  that,  pending  any  settlement  or  suit  in  court,  the  seized  books  and 
papers  remained  in  custody  of  the  ofiBcials,  thus  seriously  interfering  with 
the  ordinary  business  transactions  of  the  parties  to  whom  they  belonged. 
At  the  same  time,  the  credit  of  the  firm  tended  to  become  impaired,  espe- 
cially in  foreign  countries,  where  the  mere  fact  that  the  Government  had 
instituted  charges  and  seized  property  was  regarded  by  the  uninformed  as 
all-sufficient  evidence  that  the  House  had  ceased  to  be  responsible  ;  and  lest 
reports  and  rumors  transmitted  by  ordinary  agencies  should  not  be  suflBcient 
to  work  as  much  mischief  in  this  respect  as  was  desired,  the  same  unscrupu- 
lous competitors  in  business  and  their  sympathizers,  who  had  connived  at 
the  entrance  of  the  store  of  Phelps,  Dodge  &  Co.  at  midnight  the  year  before, 
took  uponthemselvesnot  only  to  have  false  and  malicious  articles  written  and 
published  in  certain  papers,  but  mailed  large  numbers  of  such  publications 
to  all  parts  of  the  world  where  the  firm  was  known  to  have  business  con- 
nections and  correspondents.  As  illustrations  of  the  effect  of  all  this,  it 
may  be  mentioned  that  in  places  as  remote  as  Pen  an  g,  in  the  Straits  of 


AN    EXTRAORDINARY    HISTORY.  287 

Malacca,  where  Phelps,  Dodge  &  Co.  were  known  as  extensive  purchasers 
of  tin,  a  strong  and  almost  successful  attempt  was  made  to  throw  dis- 
credit upon  the  bills  of  the  house  ;  and,  also,  that  in  more  than  one  instance 
the  delivery  of  consignments  of  metal  to  the  firm  from  Europe  was  sus- 
pended by  cable  telegrams  to  the  owners  or  agents  of  the  transporting 
vessels,  for  the  reason  (as  afterwards  explained  in  letters)  that  such  reports 
reached  the  consignors,  in  respect  to  the  position  and  difficulties  of  the 
consignees,  as  to  make  the  order  of  non-delivery  an  act  of  but  the  most 
ordinary  prudence  an^  self-insurance. 

Thus,  then,  is  answered  a  question  which  to  many  has  Reemed  an  inex- 
plicable mystery.  Why  did  the  firm  of  Phelps,  Dodge  &  Co.  settle  or  com- 
promise by  paying  $27 1,000,  the  amount  of  the  items  comprised  in  tlie 
several  invoices  which  were  said  to  have  been  under  valued  ?  To  repeat, 
they  settled  because  the  continuance  of  the  situation  seemed  to  involve 
inevitable  commercial  ruin.  "  We  paid  the  money,"  said  Mr.  William  E. 
Dodge,  in  explaining  this  matter  to  the  Committee  on  Ways  and  Means, 
"in  ignorance  of  the  fact  of  the  amount  we  owed  to  the  Government.  We 
never  had  a  bill  of  specifications;  we  have  not  got  one  to-day;  we  have  got 
simply  the  list  of  the  vessels  on  which  the  goods  were  imported.  We 
settled,  and  this  has  become  the  biggest  case  on  record.  It  is  known  the 
world  over.  We  look  back  upon  it,  and  we  think,  as  you  gentlemen  think, 
no  doubt,  that  we  were  fools.  We  were  fools,  but  there  was  terror  in  all 
these  things;  there  was  terror  in  that  first  day  when  we  went  into  that  dark 
hole  in  the  Custom  House;  there  was  terror  throughout." 

At  my  age,  having  been  a  merchant  fifty  years,  I  desired  to  die  in  peace. 
When  the  Secretary  of  the  Treasury  said  to  me,  "  Mr.  Dodge,  you  had 
better  go  before  the  court,"  he  knew  probably  what  I  did  not  know,  but 
which,  if  I  had  known,  I  never  would  have  paid  the  money.  I  had  no 
knowledge  that  there  was  only  sixteen  hundred  dollars  involved  in  the 
whole  case,  running  over  five  years,  and  covering  importations  to  the 
amount  of  $30,000,000.  I  a»n  not  so  big  a  fool  as  that;  but  the  fact  was 
kept  from  us,  and  kept  from  us  purposely.     I  had  no  idea  of  it." 

Of  the  $271,017.23  extorted,  under  the  circumstances  as  above  related, 
from  the  firm  of  Phelps,  Dodge  &  Co.,  and  which  they  paid  as  the  price  of 
the  discontinuance  of  persecution,  one  half,  less  fees  of  the  court,  was  paid 
into  the  Treasury  of  the  United  States.  The  disposition  of  the  remainder 
was  thus  grapliically  ami  significantly  detailed  to  the  House  of  Representa- 
tives by  a  member  of  the  committee: 

"  The  costs  in  court,  though  nothing  was  done,  amounted  to  $8,145.09.  The  share  of  the 
District  Attorney  in  the  $271,000  was  over  $5,400;  that  of  the  Collector,  Naval  Officer  and 
Surveyor  was  $21,906.01  each,  or  $65,718.03  in  all.   Jayne  got  $65,718.03,  which  he  was  to 


288  CONGRESS   AND    PHELPS,    DODGE   &   CO. 

divide  with  the  thief  who  stole  the  papers.  General  Butler  was  paid  a  large  fee,  out  of  liis 
and  the  thief's  portion,  by  Jayne.  How  much  Senator  Conkling  got  as  adviser  of  the  Custom 
House  officers  does  not  appear.  They  failed  to  avail  themselves  of  our  invitation  or  notifica- 
tion tiiat  we  would  gladly  hear  them  if  they  liad  anything  to  say,  so  that  we  were  unable  to 
prove  what  their  private  arrangements  with  counsel  were." — Speech  of  Eon.  James  Beck. 

Aud  here  properly  comes  in  an  incident  which  contributes  not  a  little  to 
increase  the  romance  with  which  the  history  of  this  extraordinary  case  is 
already  invested  ;  for,  as  time  went  on,  and  the  attention  of  members  of 
the  bar  was  specially  given  to  the  consideration  of  the  principles  according 
to  which  controversies  between  the  Government  and  the  merchants,  arising 
out  of  the  construction  of  the  most  complicated  and  absurd  system  of 
revenue  laws  that  ever  existed,  were  to  be  judicially  settled,  a  statute 
(Act  of  Congress)  was  discovered  to  be  in  existence  which,  had  the  case  of 
Phelps,  Dodge  &  Co.  been  taken  into  the  U.  S.  courts,  would  have  been  an 
effectual  bar  to  the  continuance  of  any  proceedings  against  them  looking  to 
either  penalties  or  forfeitures.  This  statute,  passed  in  1868,  but  curiously 
overlooked  and  forgotten  until  1875,  even  in  important  cases  argued  and 
decided  before  the  Supreme  Court  at  Washington,  recognized,  intentionally 
or  otherwise,  to  the  fullest  extent,  that  great  principle  of  the  Anglo-Saxon 
law,  that  no  man  could  be  compelled  to  give  testimony  crimiiiating  himself, 
or  testimony  that  might  subject  him  to  a  penalty  or  forfeiture,  and  reads  as 
follows: 

"  That  no  answer  or  other  pleading  of.  any  party,  and  no  discovery  or  evidence  obtained 
"  by  means  of  any  judicial  proceeding  from  any  party  or  witness  in  this  or  any  foreign 
"  country  shall  be  given  in  evidence,  or  in  any  manner  used  against  such  party  or  witness, 
"  or  his  property  or  estate,  in  any  Court  of  the  United  States,  in  respect  to  any  crime,  or  for 
"  the  enforcement  of  any  penalty  or  forfeiture  by  reason  of  any  act  or  omission  of  such  party 
•'or  witness:  Provided,  That  nothing  in  this  Act  shall  be  construed  to  exempt  any  party  or 
"witness  from  prosecution  and  punishment  for  perjury  committed  by  him  in  discovering 
"  or  testifying  as  aforesaid. 

"  Sec.  2.  And  he  it  further  enacted,  that  this  Act  shall  take  effect  from  its  passage,  and 
"  shall  apply  to  all  pending  proceedings  as  well  as  those  hereafter  instituted." —  U.  S.  Laws 
of  1868,  Cliap.  13. 

How  a  law  of  this  character  could  have  so  long  remained  practically 
unrecognized  on  the  statute  book  (being  brought  forward  apparently  for  the 
first  time  by  the  counsel  for  the  defence,  S.  B.  Eaton,  Esq.,  in  the  important 
case  of  the  United  States  vs.  Hughes,  in  February,  1875,)  finds  explanation, 
possibly,  in  the  circumstances  that,  previous  to  the  revision  of  the  laws  of 
ihe  United  States  (enacted  June  22d,  1874),  the  statutes  of  tlie  United 
States  for  the  assessment  and  collection  of  the  revenue  on  imports  were  so 
numerous  and  so  complicated  that  it  had  been  almost  impossible  for  even 
experts — to  say  nothing  of  merchants — ;to  know  exactly  what  the  law  waa. 


AN    EXTRAORDINARY    HISTORY.  289 

Thus,  between  the  dates  of  the  general  Tariff  Act  of  March  2,  1861,  and 
of  the  Revised  Statutes,  Congress  passed  some  sixty  laws  relating  to  duties 
on  imports  and  their  collection.  Five  of  these,  namely,  two  enacted  in 
1861,  one  in  1862,  one  in  1864,  and  another  in  1872,  may  be  classed  as 
general  tariff  acts,  because  they  covered  a  large  class  of  articles.  Neither 
of  these  in  terms  entirely  repealed  the  previous  ones,  nor  did  Congress  in- 
tend they  should  be  altogether  repealed  ;  and  so  each  successive  enact- 
ment of  the  whole  sixty,  after  the  first  one,  may  be  said  to  have  overlapped 
and  modified  all  that  preceded  it.  It  was,  therefore,  only  by  the  most 
careful  study  that  it  became  possible  to  determine  how  much  at  any  given 
time  any  specific  enactment  of  the  series  remained  in  force.  And,  as  a 
further  illustration  of  the  difificulties  growing  out  of  this  multiplicity  of  un- 
repealed statutes,  the  curious  case  of  Smythe  vs.  Fisk  may  be  cited,  in 
which  the  Collector  of  the  Port  of  New  York  having  sued  an  importer  to 
recover  penalties,  the  District  Court  of  the  United  States,  presided  over  by 
a  judge  familiar  with  revenue  laws,  decided  that  the  duties  were  charge- 
able uuder  one  statute,  while  the  Supreme  Court  of  the  United  States, 
to  which  the  case  was  appealed,  unanimously  reversed  the  decision,  on  the 
ground  that  the  duties  were  chargeable  under  a  subsequent  and  different 
enactment;  and  yet  it  was  under  such  a  system  of  laws,  the  provisions  of 
which  were  unknown  to  even  the  judges  and  to  members  of  the  bar  making 
revenue  cases  a  specialty,  that  the  firm  of  Phelps,  Dodge  &  Co.  were  fined 
$271,000  for  an  error  involving  an  apparent  loss  to  the  Government  of 
$1,600,  in  an  importation  extending  over  five  years  of  over  $30,000,000,  and 
on  which  duties  were  paid  to  the  extent  of  from  six  millions  to  eight 
millions  of  dollars.  It  is,  furthermore,  safe  to  affirm,  that  if  the  records  of 
any  private  business  extending  over  such  a  period  and  embracing  such  an 
amount  were  to  be  thoroughly  investigated  by  outside  experts,  each  one 
actuated  by  the  strongest  of  motives,  i.  e.,  large  pecuniary  gains,  to  dis- 
cover errors  of  omission  or  commission,  that  there  would  be  exceedingly 
few  that  could  be  found  to  stand  the  test. 

The  case  having  been  thus  settled,  it  was  evidently  the  expectation  of 
the  moiety  people  and  their  advocates  that  the  firm  of  Phelps,  Dodge  &  Co., 
like  many  other  merchants  who  had  before  been  made  the  subject  of  simi- 
lar though  smaller  exactions,  would  be  content  to  be  quiet.  But  the  firm, 
conscious  of  their  entire  innocence,  and  feeling  that  a  grievous  wrong  had 
been  done  them,  determined  that  they  would  not  keep  quiet ;  and  they 
accordingly,  on  the  15th  of  April,  1873,  caused  to  be  published  a  state- 
ment of  the  case  from  their  standpoint  of  view,  addressed  "  To  our  friends 
and  the  Public."  This  statement,  which  was  probably  published  entire  or 
in  abstract  in  every  paper  or  journal  of  the  United  States  (so  great  was 

19 


290  CONGRESS    AND    PHELPS,    DODGE   &    CO. 

the  interest  in  the  case),  was  so  clear  in  its  presentation  of  the  facts,  and 
so  strongly  fortified  by  accompanying  letters  from  Hon.  Noah  Davis, 
United  States  District  Attorney  at  the  time  of  the  inception  of  the 
difficulties;  from  lion.  Thos.  H.  Dudley,  Consul  of  the  United  States 
at  Liverpool,  who  verified  and  certified  to  the  correctness  of  the  iden- 
tical invoices  afterwards  claimed  to  be  undervalued  ;  and,  finally,  from 
the  head  detective  and  informant  himself,  B.  G.  Jayne,  that  an  immense 
revulsion  of  pulplic  feeling  was  excited  ;  so  much  so,  that  those  who  had 
originally  been  most  prompt  to  condemn  the  firm  now  became  the  most 
eager  and  ready  to  defend  them.  In  this  matter  the  mercantile  community 
throughout  the  country  took  the  lend  ;  and  the  New  York  Chamber  of 
Commerce  especially  signified  its  opinion  by  unanimously  reelecting  Hon. 
William  E.  Dodge,  the  head  of  the  firm  of  Phelps,  Dodge  &  Co.,  to  the  post 
of  President  of  the  Chamber — an  office  from  which,  it  was  well  known,  it 
was  his  intention  to  have  retired. 

Public  sentiment,  thus  aroused  to  the  iniquity  which  had  been  perpetrated 
by  United  States  officials  under  the  pretence  of  subserving  law  and  justice, 
did  not,  furthermore,  as  time  went,  subside;  but,  on  the  contrary,  so  gath- 
ered strength  that,  on  the  meeting  of  Congress  in  the  following  December, 
there  was  no  one  matter  upon  which  the  opinion  of  the  country  was  more 
l)ronouneed  and  unanimous  than  that  the  treatment  to  which  the  merchants 
of  the  seaboard  cities  had  been  subjected  by  the  Treasury  officials  should  be 
specially  and  thoroughly  investigated  by  one  or  both  branches  of  the 
national  Legislature. 

The  Committee  of  Ways  and  Means  of  the  House  of  Representatives, 
therefore,  at  an  early  day,  in  accordance  with  a  resolution  of  instructions  on 
the  part  of  the  House,  and  being  at  the  same  time  vested  with  the  requisite 
authority,  entered  upon  the  investigation — the  National  Board  of  Trade, 
and  the  Chambers  of  Commerce  and  Boards  of  Trade  of  most  of  the  leading 
cities  of  the  country  being  represented  before  the  Committee,  either  by 
coun.^el  or  delegations  of  members.  The  investigation  once  inaugurated, 
and  commencing  in  February,  1873,  lasted,  with  some  interruptions,  until 
the  following  May.  Among  the  first  persons  called  before  the  Committee 
were  Hon.  William  E.  Dodge,  and  Jayne,  the  detective  and  informer  of  rec- 
ord in  the  case  of  Phelps,  Dodge  &  Co.  The  examination  of  each  lasted 
several  days  and  alternated.  Like  the  cuttle  fish,  which  endeavors  to  pro- 
tect itself  by  blackening  everything  contiguous,  Jayne  hoped  to  relieve 
himself  in  some  degree  from  the  feeling  of  public  detestation  that  surrounded 
him,  by  gross  abuse  and  denunciation  of  the  merchants  of  New  York  in 
general,  and  of  Phelps,  Dodge  &  Co.  in  particular — Gen.  Butler,  a  member 
of  the  House  at  the  same  time,  being  his  acknowledged  friend  and  counsel. 


AN    EXTRAORDINARY  HISTORY.  291 

What  the  Committee  thought  of  the  Rtatcments  of  Mr.  Dodge  may  be  in- 
ferred from  the  report  subsequently  made  by  them  to  the  House,  recom- 
mending the  repeal  of  the  laws  under  which  tlie  liouse  he  represented  had 
been  arraigned  and  mulcted.  What  they  thought  of  Jayne  maybe  inferred 
from  the  following  picture,  which  the  chairman  of  the  Committee,  Hon.  H. 
L.  Dawes,  drew  of  him  in  his  speech,  accompanying  the  report,  before  the 
House: 

"  Sir,  who  is  the  informer?  He  is  to  have  half  of  tlie  whole.  The  officials  take  the  other 
half  and  divide  it  into  three  parts.  His  is  the  lion's  share.  Sir,  the  iniomier,  in  every  position 
of  society,  in  every  place,  and  in  every  callinjr,  is  an  odions  and  despised  being.  Everybody 
shrinks  from  him,  no  matter  what  be  his  position  or  his  calling.  He  that  goes  about  making 
a  business  of  informing  against  his  neighbor  so  shocks  the  common  sense  of  justice,  decency 
and  honor  in  all  mankind,  that  he  is  universally  despised.  But  let  him  do  it  for  pay ;  let  it 
be  understood  that  he  goes  up  and  down  the  earth  paid  to  inform  against  his  fellow  men,  and 
the  intensity  of  the  feeling  of  hatred  with  which  he  is  regarded,  and  the  feeling  that  he  ought 
to  be  huyted  around  the  earth,  is  increased  tenfold.  Add  to  that  that  he  is  to  have  half  of 
what  may  be  made  out  of  his  informing.  Ho  is  bad  enough  when  he  volunteers  without 
compensation,  from  any  motives  of  malice  or  otherwise,  to  inform  against  his  neighbor;  he  has 
no  place  whatever  in  decent  society;  but  when  he  does  it  for  pay,  much  more,  when  he  is  to 
have  half  of  the  proceeds  of  his  cursed  employment,  the  door  of  decent  society  ought  to  be 
and  will  bo  slnit  against  him. 

"  Tne  leper  may  l)e  tolerated  among  men,  for  his  leprosy  is  iiis  misfortune.  Tlie  mati  that 
carries  about  him  a  loathsome  disease,  that  is  not  his  fault  but  his  misfortune,  engages  the 
charity  of  the  world  to  build  an  hospital  for  him,  and  to  care  for  him  with  pity  and  compas- 
sion. But  the  vile,  fostering,  putrescent  informer,  who  goes  Hlx>ut  the  earth  assure*!  of  one 
half  of  what  he  can  make  by  his  informing,  finds  no  place  as  yet  where  decent  mcMi  will 
harbor,  or  countenance,  or  associate  with  him.  "We  guard  this  man,  roving  around  among 
the  merchants  of  the  cities  of  New  York,  Boston  and  Philadelphia,  with  money  enough,  the 
fruits  and  promises  of  his  success,  to  enable  him  to  ftirnish  the  means  that  will  invade  the 
confidential  relations  that  exist  tetween  the  merchant  and  his  clerks,  tainting  the  most 
sacred  trusts,  lying  in  wait  for  the  unwary,  and  seeing  the  merchant  unwittingly  put  in  his 
foot  by  omitting,  it  may  be  by  accident  or  by  ignorance,  or  by  any  of  the  thousand  ways 
consistent  with  his  honesty,  to  conform  to  the  most  complicated  system  of  revenue  in  the 
world — standing,  I  say,  at  the  desk,  and  seeing  the  merchant  from  day  to  day  openly  and 
unconscious  of  any  wrong,  making  misiakes  in  his  invoices,  with  a  law  behind  him  that 
says  a  mistake  in  one  item  forfeits  the  whole  invoice,  and  then,  when  they  are  piled  up  by 
the  dozen  upon  the  desk  of  the  Custom  House,  going  and  informing  against  him  and  getting 
one  quarter  of  the  forfeitures. 

"  Shall  the  Grovernment  of  the  United  States  take  the  wages  of  his  sin  and  his  iniquity 
and  divide  with  him  ?" 

It  is  also  pertinent  to  here  add  that,  pending  his  examination  before  the 
Committee,  B.  G.  Jayne  tendered  his  resignation  of  his  position  under  the 
Government,  and  that  the  same  was  promptly  accepted. 

Among  the  other  persons  who  appeared  before  the  Committee  in  further- 
ance of  the  investigation,  and  in   opposition   to  the  whole  system  under 


292  CONGRESS    AND    PHELPS,    DODGE   &    CO. 

which  Jayne  and  his  associates  had  operated,  wore  Hon.  Jackson  S.  Schultz, 
Hon.  Noah  Davis,  Daniel  C.  Robbins,  Esq..  John  C.  Hopper,  Esq.,  Cephas 
Brainerd,  Esq.,  S.  A.  Eaton,  Esq.,  of  New  York  ;  B.  F.  Nourse,  Esq.,  of  the 
National  Board  of  Trade  ;  John  W,  Candler,  Hon.  Alexander  H.  Rice  and 
H.  D.  Hyde,  of  the  Boston  Board  of  Trade  ;  John  Field,  D.  F.  Houston, 
James  E.  Caldwell,  of  Philadelphia  ;  Andrew  Reid,  of  the  Baltimore  Board 
of  Trade,  and  others.  On  the  other  side,  in  addition  to  JayHe,  appeared 
the  successor  of  Judji^e  Davis  in  the  office  of  District  Attorney  of  New  York, 
Geo.  Bliss,  and  Francis  D.  Moulton,  of  Brooklyn. 

As  the  result  of  these  investiprations  the  Committee  of  Ways  and  Means 
reported  a  bill  repealing  all  provisions  of  law  under  which  moieties  of  any 
fines,  penalties,  or  forfeitures  were  paid  to  informers,  or  any  officers  of  the 
United  States  ;  and  also  all  provisions  of  law  authorizing  the  arbitrary 
seizure  of  books  and  papers  ;  which  bill,  after  being  slightly  amended, 
passed  the  House  of  Representatives  unanimously,  and  the  Senate  with 
only  three  dissenting  votes.  The  verdict  of  Congress,  after  a  full  and 
careful  examination,  was,  therefore,  most  expressive  and  unequivocal  in 
respect  to  the  character  of  the  transaction  reviewed  ;  the  action  of  Jayne 
and  his  associates,  and  the  treatment  which  Phelps,  Dodge  &  Co.  and  other 
merchants  received  at  the  hands  of  the  so-called  representatives  of  the 
Government ;  a  result,  if  unanimity  of  sentiment  be  considered,  almost 
without  parallel  in  the  history  of  American  Congressional  legislation. 

It«might  naturally  have  been  expected  that  at  this  point  this  extraordi- 
nary history  would  have  been  permitted  to  have  come  to  an  end  ;  but  it 
was  not  so  to  be  ;  for  another  incident,  further  illustrative  of  the  character 
of  the  men  whose  action  in  seeking  to  make  the  whole  people  partners  in 
their  scandalous  combinations  against  individual  citizens  had  been  so 
thoroughly  condemned  by  Congress  and  the  public,  was  yet  to  be  added  to 
the  details  that  preceded,  and  which  have  here  been  related. 

In  this  the  chief  actor  was  Gen.  Butler,  who,  as  already  stated,  was  em- 
ployed by  Jayne  to  assist  him  in  his  schemes  against  tne  New  York  mer- 
chants, and  who  also  acted  as  Jayne's  confidential  friend  and  adviser  when 
the  latter  was  before  the  Committee  of  Ways  and  Means  for  examination. 
Gen.  Butler  himself,  however,  did  not  appear  before  the  Committee  to  assist 
in  the  investigation,  as  it  was  confidently  asserted  that  he  would,  although 
every  opportunity  to  do  so  was  offered  him.  Neither  did  he  take  part  in 
the  very  full  discussion  before  the  House,  when  the  bill  repealing  moieties 
and  the  right  to  seize  books  and  papers  was  reported,  considered,  and 
adopted  ;  although  Hon.  Ellis  H.  Roberts,  of  New  York,  in  the  subsequent 
proceedings  of  the  House,  said  to  him  : 

*'  I  have  asked  you  three  times  to  come  into  this  House  and  debate  this  question,  and  you 
had  not  the  courage  to  come. 


AN    EXTRAORDINARY   HISTORY.  293 

Mr.  Butler,  of  Massachusetts. — Not  when  I  was  sick. 
Mr.  Ellis  H.  Roberts — 

"  I  did  hear  him  groan: 
Ay,  and  that  tongue  of  his, 
*  ♦  *  * 

Alas!  it  cried,  '  Give  me  some  drink,  Titinius,' 
As  a  sick  girl." 

Mr.  Butler,  of  Massachusetts. — Yes,  I  am  like  <Da)8ar. 
Mr.  Ellis  H.  Roberts. — Yes,  "  As  a  sick  girl." 

When  the  so-called  "  Moiety"  bill  was  passed,  General  Butler,  apparently 
unwilling  to  constitute  a  rainority  of  orie,  also  refrained  from  voting  against 
it,  and  likewise  remained  silent  when  another  bill  was  acted  upon,  repealing 
laws  under  which  another  client  and  prot^gd,  Sanborn,  had  drawn  large 
sums  from  the  treasury  for  nominal  and  unnecessary  services.  Some  two 
or  three  days,  however,  before  the  close  of  the  session,  Gen.  Butler  asked 
of  the  House  that  the  evening  of  Friday,  June  19th,  might  be  assigned  for 
general  debate,  with  the  understanding  that  he  himself  would  occupy  the 
floor;  and  as  no  business  was  assigned  for  that  evening,  "  the  granting  of 
the  Hall  to  Butler,"  says  the  correspondent  of  the  New  York  World,  from 
whom  we  quote  (under  date  of  June  20th),  "  was  pretty  much  the  same 
thing  as  granting  it  to  a  company  of  negro  minstrels,  or  to  a  band  of  Japs 
who  advertise  to  swallow  knives  and  spoons.  The  desire  to  hear  Butler 
was  irresistible,  but  he  by  no  means  got  the  two  thirds  assent  without  try- 
ing twice  for  it.  Having  failed  in  his  first  trial,  he  cajoled  the  more  fun 
loving  Democrats,  and  assured  them  that,  whatever  happened,  it  would  not 
be  a  Democratic  funeral,  but  that,  contrariwise,  they  would  be  called  on  to 
participate  in  a  very  jolly  wake;  and,  accordingly,  Gen.  Butler  got  the  floor 
for  Friday." 

As  was  to  be  expected,  the  speech  of  General  Butler,  made  under 
the  circumstances  and  at  the  time  above  noted,  was  a  rearraignment  of 
and  an  attack  on  the  merchant^  of  New  York,  and  the  firm  of  Phelps,  Dodge 
&  Co.  in  particular,  as  undoubtedly  in  his  opinion  the.  best  method  of  vin- 
dicating himself  and  the  clientage  of  spies,  informers  and  fraudulent  revenue 
contractors  whom  he  had,  for  pay,  counseled  and  protected — and  for  scur- 
rility, mendacity  and  buffoonery,  was  without  parallel  in  the  annals  of  our 
national  Legislature. 

The  investigations  and  recent  report  of  the  Committee  of  Ways  and 
Means  having,  however,  left  him  no  vantage  ground  for  attack  in  reference 
to  any  recent  proceedings,  and  as  defamation  of  the  character  of  those 
whom  his  clients  had  plundered  and  persecuted  was  the  main  or  sole  object 
aimed  at,  Gen.  Butler's  only  recourse  was  to  go  back  and  invent  and  mis- 


294  CONGRESS    AND    PHELPS,    DODGE   &   CO. 

apply  certain  old  stories  of  the  past,  hoping  undoubtedly  that  no  one,  on  the 
spur  of  the  moment,  would  be  found  to  deny  and  prove  their  falsity;  and, 
also,  probably  acting  upon  the  principle  that  a  lie  well  told  has  always  the 
semblance  and  often  the  efficacy  of  truth  ;  but  in  both  of  these  anticipations 
General  Butler  was  disappointed — his  attacks  against  the  firm  of  Phelps, 
Dodge  &  Co.  recoiling  most  disastrously  against  himself.  Thus,  in  the  first 
instance,  he  endeavored  to  throw  obloquy  upon  the  firm  by  asserting  that, 
years  ago,  they  had  evaded  the  payment  of  the  customs  duty  on  lead  by 
importing  it  in  the  form  of  statuary,  under  a  clause  of  the  tariff  which 
admitted  statuary  free  of  duty.  It  so  happened,  however,  that  a  published 
statement  of  this  whole  matter  had  been  recently  made,  showing,  beyond  the 
possibility  of  any  question — 1st,  that  at  the  time  of  the  event  referred  to  by 
General  Butler,  the  firm  of  Phelps,  Dodge  &  Co.  was  not  in  existence;  and, 
2d,  that  whatever  the  transaction  was,  it  was'  passed  upon  at  the  time  by 
the  courts,  and  decided  to  be  entirely  legal;  and  the  attention  of  the  House, 
at  the  conclusion  of  General  Butler's  speech,  being  immediately  called  to  the 
exact  facts  by  Hon.  Lyman  Tremain  and  others,  the  lie  and  the  refutation 
went  on  to  the  record  and  before  the  country  conjointly. 

And,  in  the  second  instance,  when  it  was  charged  by  General  Butler  that 
the  firm  of  Phelps,  Dodge  &  Co.  had  procured  the  alteration  of  an  Act  of 
Congress,  whereby  the  duties  levied  on  certain  articles  had  been  changed  to 
the  advantage  of  the  firm  as  importers,  it  was  also  shown — 1st,  that  the 
alteration  referred  to  was  merely  the  correction  of  an  error  of  expression 
in  a  law,  and  that  the  change  in  question  was  publicly  authorized  by 
Mr.  Fessenden  when  Secretary  of  the  Treasury,  with  the  full  concurrence  of 
the  proper  law  officers  of  the  Government.  2d,  that  it  was  an  absurdity 
on  its  face  to  suppose  that  a  private  firm  or  individual  could,  under 
any  circumstances,  alter  a  law  of  Congress  after  its  enrollment  and  enact- 
ment; and  3d,  that  the  change,  so  far  from  having  been  of  any  pecuniary 
advantage  to  the  firm,  was  really  to  their  disadvantage. 

This  speech  of  General  Butler's  was  replied  to  immediately,  amid  great 
excitement  on  the  floor  of  the  House,  by  Hon.  Ellis  H.  Roberts,  of  New 
York;  Hon.  Charles  Foster,  of  Ohio;  Hon.  Lyman  Tremain,  of  New  York, 
and  Hon.  Henry  S.  Dawes,  of  Massachusetts,  the  last  named  gentleman 
being  at  the  time  chairman  of  the  Committee  of  Ways  and  Means.  In  the 
course  of  this  debate,  which  was  protracted  until  nearly  midnight,  Mr. 
Foster,  of  Ohio,  pronounced  some  of  the  statements  made  by  General  Butler 
to  be  "unequivocal  falsehoods  ;"  and  also  charged  that  one  of  Mr.  Foster's 
letters,  which  General  Butler  read  in  his  speech,  and  claimed  to  have  been 
picked  up  in  the  street,  was  in  reality  stolen  from  his  (Foster's)  pocket.  Of 
the  character  of  the  other  speeches  the  following  extract,  from  that  of  Hon. 
Lyman  Tremain,  will  serve  as  an  example: 


AN    EXTKAOKDIXARY    HISTORY.  295 

"  Xo  man  can  deny  the  power  of  the  gentleman  from  Essex.  But  he  has  not  the  power  to 
raise  tlie  dead;  and  until  he  has  that  power  he  can  never  reverse  the  judgment  of  this 
House  and  of  this  country  that  the  Sanborn  contract  and  the  manner  of  its  performance  con- 
stitute the  most  disgraceful  and  disgusting  performance  that  has  ever  brought  discredit  upon 
the  American  name.  With  all  his  power  to  please,  and  to  call  down  the  plaudits  of  the 
galleries,  the  gentleman  from  Massachusetts  can  never  roll  back  the  popular  tide  or  reverse 
that  judgment,  which  is  the  judgment  of  the  American  people,  that  the  scenes  which  have 
transpired  in  New^York,  of  which  Phelps,  Dodge  &  Co.  were  the  victims,  are  as  deserving 
of  the  condemnation  of  an  honest  and  justice  loving  community  as  were  the  diabolical 
transactions  of  the  inquisition  and  of  the  star  chamljer. 

Sir,  there  is  in  all  this  broad  land  but  one  man  who  has  the  boldness  to  stand  up  against 
the  judgemnt  of  an  honest  people — against  the  unanimous  cxpresssion  of  tliis  House — 
against  the  conscience  and  the  honest  opinions  of  a  thoughtful  and  a  truth  loving  community 
in  regard  to  these  transactions.  The  time  for  making  the  defence  was  when  the  gentleman 
from  Massachusetts  was  invited  and  he  did  not  come.  Ho  was  sick !  He  will  be  sicker  yet 
before  he  gets  through  with  his  connection  with  the  Sanborn  and  the  Jayno  infamies. 
No  man  is  able  to  stand  up  before  the  American  people  and  sustain  these  atrocious  pro- 
ceedings."' 

Six  months  bad  not  elapsed  before  the  above  prophecy  and  assertion  of 
Mr.  Tremain  was  made  fact  ;  and  Gen.  Butler,  bj  an  overwhelming 
majority,  was  declared,  by  the  constituents  to  whom  he  had  again  ap- 
pealed, unworthy  to  longer  represent  them  in  the  halls  of  the  national 
legislature. 

With  the  detail  of  this  latter  incident  this  extraordinary  series  of  events 
for  the  present  comes  to  a  close.  Whether  in  the  future  there  is  to  be  oc- 
casion for  continuing  the  record  ;  whether  the  Government  will  do  justice 
by  paying  back  the  money,  time  only  can  show.  But  of  this  we  may  be 
sure,  that  what  has  occurred  and  what  has  been  written  has  passed  per- 
manently into  political  and  economic  history,  to  be  used  hereafter  for  illus- 
trating how  fiscal  laws,  enacted  in  disregard  of  true  and  acknowledged 
economic  principles,  and  having  for  a  purpose  the  subserving  of  objects 
other  than  the  direct  pecuniary  necessities  of  the  State,  invariably  work  to 
the  loss  and  demoralization  of  the  whole  people  ;  and  also  how,  even  under 
an  acknowledged  free  and  Republican  form  of  Government,  a  system  and 
practice  of  espionage  and  terrorism,  the  like  of  which  would  have  been  dis- 
graceful even  under  a  despotic  government  of  old  Europe,  becomes  not  only 
possible,  but  is  justified  and  participated  in  by  men  occupying  the  first  posi- 
tions in  the  State. 

'*  111  fares  the  land  to  hastening  ills  a  prey, 
Where  wealth  accumulates  and  men  decay." 

DAVID  A.  WELLS. 


OUR  REVENUE  SYSTEM. 


HISTORY  OF  THE  PROCEEDINGS 


IN  THE  CASE  OF 


PHELPS,  DODGE  &  CO. 


OF    1S^E\^^   YORK. 


AND 


VINDICATION  OF  THE  FIRM, 


'^tw  |orli 


Mabtin's  Stbah  Pbintisg  House,  111  Joun  Street. 


1873. 


INTRODUCTION. 


Frequent  requests  for  the  details  of  the  controversy  between  the 
United  States  Customs  authorities  and  the  Iiouse  of  Plielps,  Dodge 
&  Co.,  have  induced  their  collection  in  the  following  pages. 

Tlie  original  and  full  statement  made  by  the  firm  was  subsequently 
strengthened,  it  will  be  found,  by  the  official  publication  from  the 
Treasury  Department  of  the  voluminous  correspondence  in  the  case. 

To  these  have  been  added  extracts  from  leading  newspapers  and  a 
summary  of  the  action  of  the  Chamber  of  Commerce. 

The  Press  has  reviewed  all  the  questions  in  dispute  with  care  and 
impartial  justice,  and  has  pronounced  the  honor  and  integrity  of  the 
parties,  who  have  suffered  so  deeply,  to  be  free  from  stain.  This 
has  to  a  large  extent  compensated  for  the  wide  and  indiscriminating 
publication,  by  interested  persons,  of  the  charges  originally  made. 

Among  the  numerous  editorials  bearing  upon  this  affair,  to  present 
which  would  require  volumes  instead  of  pages,  the  exceptions  to  the 
general  verdict  are  but  few.  Some  of  the  more  thoughtful  and 
judicial  articles  have  been  selected  from  daily  and  weekly  journals, 
and  are  here  given  without  note  or  comment,  beyond  what  is  strictly 
necessary  to  explain  their  connection  with  the  progress  of  the  case. 

!N^EW  York  City,  June  1,  1873. 


CONTENTS 


Page. 

Introduction 3 

Statement  op  the  Firm 5 

Comments  op  the  Press  at  Large 16 

"           "        "    Trade  and  Financial  Press 29 

"           "        "    Religious  Press 35 

A  Rejoinder  prom  "Washington 45 

The  Oppicial  Correspondence 53 

Action  op  New  York  Chamber  op  Commerce 63 

Concluding  Articles 73 

Appendix 79 


The  Case  of  Phelps,  Dodge  &  Co. 


STATEMENT  OF  THE  FIRM. 


To    OIK    ii'KIKND.S    AND    TllK    i'lUnj 


c : 


For  a  period  of  nearly  four  montlis  oiir  firm  lias  beoii  uia»lc  the  subject  of 
accusation  and  criticism,  so  harsh  and  unjust  that  it  has  seemed  to  us  as  if  the 
generally  accepted  rule,  which  assumes  "  all  accused  innocent  until  proved  to  be 
guilty,"  had  been,  at  least  in  our  case,  set  aside  in  favor  of  that  other  principle 
"that  all  accused  shall  bo  held  guilty  until  they  establish  their  innocence." 

During  nearly  all  this  period,  by  reason  of  various  circumstances,  such  as  the 
fact  that  the  matters  involved  were  still  the  subject  of  controversy  between  our 
firm  and  the  Government ;  and  above  all,  that  by  the  taking  and  retention  of 
our  books  and  papers  by  the  authorities  we  were  not  in  full  possession  of  all  the 
evidence  relied  on  by  the  Government  to  sustain  the  charges  preferred  against 
us,  it  has  not  been  considered  expedient  to  say  anything  in  the  way  of  public 
explanation ;  but  the  time  has  now  come  when  an  explanation  is  proper. 

In  the  extensive  importing  business  in  which  we  are  engaged,  tin  plate  con- 
stitutes the  chief  article  subject  to  an  ad  valorem  duty;  and  we  are  associated 
with  the  house  of  Phelps,  James  &  Co.,  of  Liverpool,  which  is  largely  occupied 
with  its  procurement  and  shipment.  As  the  trade  which  we  do  in  this  article  is 
very  large,  and  as  it  is  entirely  impossible  to  purchase  at  any  time  any  very 
large  quantity  from  accumulated  stocks,  it  has  been  long  the  custom  of  our 
T^iverpool  house  to  arrange  for  the  manufacture  of  supplies  through  contracts 
extending  over  lengthened  periods;  and  also,  in  many  instances,  to  advance  to 
manufacturers  the  various  constituents  of  their  business,  and  even  capital,  and 
receive  in  retiu*n  the  finished  product  at  prices  conditional  upon  the  fluctuating 
values  of  the  raw  materials,  and  through  settlements  effected  at  very  consider- 
able intervals. 

The  complicated  tariff  question  now  arises  :  In  what  manner  are  tin  plates 
and  similar  products  manufactured  and  purchased  under  such  conditions  to  be 
invoiced  ? 


6  TUE  CASE  OF  PHELPS,  DODGE  &  CO. 

Requirements  of  the  Law. 
The  fundamental  tarilF  law  provides  that  duties  on  mecliandise  shall  be  assessed 
ou  "  the  actual  market  value  or  wholesale  price  thereof  at  the  period  of  exporta- 
tion, in  the  principal  markets  of  the  country  from  which  the  same  shall  have 
been  imported;"  but  another  provision  of  another  act  further  requires  that  al- 
though the  duties  assessed  must  be  on  ^^  market  value ^'^  the  invoice  accompany- 
ing it  in  case  of  purchase  must  declare  th(5  actual  cost — a  statement  which  in 
some  cases,  as  above  explained,  is  often  a  matter  very  difficult  of  exact  deter- 
mination at  the  precise  date  of  shipment. 

To  add  still  further  to  the  complication  of  legal  requirement,  the  ruling  of  tlie 
United  States  Treasury,  according  to  which  the  law  is  administered,  is  to  this 
effect :  That  all  purchased  goods  must  be  entered  at  the  Custom  House  at  actual 
cost  when  that  is  higher  than  the  market  value  at  the  time  of  shipment ;  but  at 
market  value  when  that  is  higher  than  actual  cost.  With  a  business  largely 
done,  as  ours  is,  on  contracts  for  future  delivery,  it  therefore  often  happens  that, 
on  an  advancing  market,  the  contract  price  paid  by  us  may  be  considerably  less 
than  the  market  value  at  the  time  of  shipment,  in  which  case,  if  we  invoice  at 
Liverpool  at  the  price  paid,  the  authorities  in  New  York  may  advance  the  value, 
or,  under  certain  circumstances,  demand  a  penalty  or  complete  forfeiture  on  the 
ground  of  undervaluation.  On  the  other  hand,  on  a  falHng  market,  an  invoice 
rate  representing  actual  cost  may  be  greatly  in  excess  of  market  value  at  the 
time  of  shipment ;  but  in  such  cases  no  allowance  whatever  is  made  to  the  im- 
porter. And  thus  it  has  actually  happened  that  during  the  past  year — which 
has  been  characterized  by  the  most  remarkable  and  violent  fluctuations  in  the 
prices  of  metals  (tin  plate  selhng  for  28s.  per  box  in  January,  44*.  in  July,  and 
35«.  in  December) — we  have  paid,  on  aggregate  overvaluations,  a  very  large  in- 
crease of  duties  over  and  above  what  would  have  been  required  had  the  goods 
been  purchased  at  the  date  of  shipment. 

Again,  the  very  form  of  consular  oath,  to  which,  as  citizens  of  the  United 
States  interested  in  a  house  in  Liverpool,  we  are  required  to  subscribe,  is  not 
necessarily  equivalent  to  the  declaration  which  the  Consul  himself  is  required  to 
make  and  attach  to  the  invoice ;  inasmuch  as  the  first  declares  that  the  actual 
cost,  while  the  second,  which  immediately  follows,  and  is  upon  the  same  page,  is 
to  the  effect  that  tiie  Consul  believes  the  merchant's  declaration,  and  that  the  in- 
voice exhibits  the  actual  market  valuation,  which  last  the  invoice  cannot,  unless 
*'  actual  cost  "  and  "market  value"  are  held  to  be  equivalent. 

With  this  brief  explanation  of  the  letter  of  the  law  under  which  our  goods 
are  required  to  be  invoiced,  and  its  method  of  administration,  we  will  next  en- 
deavor to  make  clear  wherein,  through  its  supposed  infraction,  we  have  offended 
and  been  made  subject  to  penalties. 


STATEMKNT  OF  THE  FIRM  7 

Causes  of  tue  Difficulty. 

As  has  been  alieaily  stated,  the  articles  before  mentioned,  imported  by  our 
firm,  are  purchased  in  large  quantities  of  many  different  makers,  sometimes  out- 
rii^ht,  sometimes  under  conditional  and  long-continued  contracts.  They  arrive  at 
Ijiverpool  in  many  dilferent  lots  every  day,  and  are  sent  directly  to  the  steamer, 
which  often  sails  the  same  day.  Triplicate  invoices,  one  of  which  must  go  by 
the  steamer  with  tlie  goods,  are  retjuired  to  be  made  out  and  taken  to  the  Con- 
sul's office  for  certification  before  one  o'clock. 

Under  such  circumstances  small  errors  in  the  invoices  received  from  the  many 
(lilferent  makers,  or  disagreements  between  the  Liverpool  house  and  the  makers 
in  respect  to  the  qualities  or  prices  to  be  paid  for  particular  goods,  are  almost  un- 
avoidable ;  but  at  the  same  time  it  was  not  cliarged  by  the  Government  that  any 
of  our  goods  had  been  passed  through  the  Custom  House  except  at  their  fair 
market  value.  It  has,  however,  happened  that  on  the  receipt  from  time  to  time 
of  sundry  small  quantities  of  special  goods — mostly  extra  and  unusual  sizes — due 
on  old  orders  or  contracted  for  months  in  advance  of  delivery,  our  fjiverpool 
correspondents  have  been  at  a  loss  to  know  how  to  invoice  them. 

The  market  value,  in  the  first  place,  was  different  from  contract  cost.  The 
requirement  of  law  ne.xt  was  that  they  should  swear  before  the  Consul  as  to  ac- 
tual cost,  and  that  the  Consul  should  certify  as  to  market  value,  which,  according 
to  the  practice  of  the  Consul's  office,  is  treated  as  the  sanje.  Then,  as  tlie  goods 
in  question  were  mainly  remnants  of  contracts  delivered  long  after  the  time 
agreed  on,  and  as  there  was  a  possibility  of  some  deduction  in  the  jieriodic  set- 
tlements for  non-fulfilment  of  contract,  the  matter  of  cost  itself,  witliin  certain 
limitations,  was  not  fixed,  l)ut  contingent.  Under  such  circumstances,  as  the 
(luantity  and  value  of  the  goods  in  question — as  \\ill  be  shown  hereafter — were 
very  small  as  compared  with  our  regular  and  accompanying  shipments,  our 
friends  in  Liverpool,  witliout,  perhaps,  sufficient  consideration,  met  the  practical 
difficulty  of  the  law  by  marking  up  these  small  items  in  the  invoice  where 
market  value  had  advanced  over  cost,  and  making  a  reduction  where  market 
value  had  declined  below  cost. 

In  such  instances,  and  in  the  way  of  explanation,  the  Liverpool  house  some- 
times sent  small  memoranda  by  the  Siime  or  the  following  steamer,  and  in  a  few 
cases  letter-press  copies  of  the  bills  of  the  manufacturers  to  them,  the  precise 
object  of  which  bills  and  memoranda  were  to  explain  that  such  and  such  num- 
bers of  an  invoice  wepe  remnants  of  an  old  order  in  respect  to  which  the  contract 
prices  varied  to  a  small  extent,  more  or  less  than  the  invoiced  (but  intended 
to  be)  true  market  value  at  the  time  of  shipment;  the  exact  truth,  as  investigation 
subsecpiently  showed,  being,  that  the  changes  in  question,  on  the  side  of  over- 


S  THE  CASE  OF  PHELPS,  DODGE  &  CO. 

valuation  and  in  favor  of  the  Government,  were  very  largely  in  excess  of  those 
in  the  direction  of  z^wc?cr- valuation  and  in  our  favor. 

These  bills  and  memoranda  we,  carelessly,  did  not  examine  personally,  not  re 
garding  them  in  any  sense  as  invoices  or  as  of  the  shghtest  importance  as  re- 
spects the  Custom  House  ;  and,  under  these  impressions,  they  were,  on  arrival, 
handed  over  to  tlio  assistant  clerk  who  copied  invoices  into  our  foreign  invoice 
book,  to  be  pinned,  without  concealment,  to  its  pages. 

Origin  and  Progress  of  the  Suit. 

It  is  foreign  to  this  explanation  to  dwell  on  the  origin  of  the  suit  instituted 
against  us  by  the  Government,  but  it  is  sufficient  to  say  that  this  clerk,  wlio  some 
years  since  was  taken  into  our  employment  in  destitute  circumstances,  and  who 
was  dismissed  for  complicity  in  allowing  dislionest  persons  to  enter  our  store^ 
secretly  and  at  night,  iu  order  to  inspect  our  letter-books  and  papers,  did  care- 
fully examine  the  bills  and  memoranda  in  question.  And,  after  surmising  that 
they  were  not  in  accordance  with  the  letter  of  the  law,  and,  in  place  of  acquaint- 
ing us  with  the  fact,  as  was  his  duty^  removed  them  from  the  invoice  book  to 
which  they  had  been  attached,  and,  after  suppressing  those  showing  instances 
where  the  Government  had  been  benefited,  but  collecting  and  carefully  preserv- 
ing the  few  where  a  small  benefit  had  accrued  to  the  firm,  put  himself  in  com- 
munication with  the  Treasury  agents. 

What  followed  was  an  invitation  for  two  members  of  the  firm  to  visit  the 
Custom  House,  where  they  were  informed  that  evidence  had  been  obtained  by 
the  Government  implicating  in  extensive  frauds  the  house  which  ihey  represented. 

They  at  once  denied  any  purpose  or  intent  to  defraud  the  Government,  as  well 
as  any  knowledge  whatever  of  any  irregularities  in  our  business  in  connection 
with  the  Custom  House ;  and,  as  a  further  earnest  of  good  faith  and  conscious 
integrity,  they  at  once  waived  the  service  of  a  warrant  which  liad  been  prepared 
against  our  books  and  papers,  and  voluntarily  and  immediately  placed  the  same 
at  the  disposal  of  the  authorities.  We  also,  at  the  same  time,  gave  our  word 
that,  if  the  Government  had  any  just  claims  against  us  by  reason  of  the  infraction 
of  any  law,  we  would  pay  the  same  to  the  uttermost  farthing,  without  causing 
legal  delays  or  expenses;  and  subsequently,  at  the  suggestion  ol  the  United 
States  District  Attorney,  Hon.  Noah  Davis,  now  Justice  of  the  Supreme  Court 
of  New  York,  that  the  matter  should  be  adjusted  on  the  basis  of  our  paying  an 
amount  equal  to  the  whole  value  of  the  items,  in  our  different  invoices,  against 
which  any  charge  of  irregularity  had  been  preferred,  we  accepted  the  same  as  a 
basis  of  settlement.  This  amount  was  subsequently  approximately  ascertained 
to  be  $260,000,  which  sum  was  deposited  to  await  the  action  of  the  Treasury 


STATEMENT  OF  THE  FIRM.  9 

Department  in  a  pro  forma  suit  wliich  was  then  agreed  upon  between  the  Dis- 
trict Attorney  and  oar  counsel. 

With  this  understanding,  in  perfect  good  faith  on  our  part,  and,  as  we  feel 
bound  to  acknowledge,  with  an  absence  of  anything  like  a  spirit  of  vindictive- 
ness  on  the  part  of  the  authorities,  the  investigation  commenced  in  December, 
the  Government  being  in  full  possession  of  our  books  and  papers,  and  also  aided 
by  our  dismissed  clerk,  who  by  becoming  an  informer  would  be  entitled  to  a 
large  share  of  all  forfeitures  whicli,  througli  his  instrumentality,  might  be  estab- 
lished. The  result  was  that,  to  our  surprise  and  astonishment,  the  slips  and 
memoranda  of  the  special  good.s  referred  to  were  regarded  by  the  special  agent 
of  the  Treasury  as  constituting  in  themselves  "  duplicate  "  invoices  and  evidences 
of  illegal  entry,  and  as  such  subjecting  us  to  the  full  penalty  of  the  statute  which, 
in  substance,  provides  that  when  any  part  of  an  invoice  is  made  in  violation  of 
the  law,  the  whole  invoice  or  its  value  becomes  liable  to  forfeiture,  but  that  the 
Secretary  of  the  Treasury  may  accept  a  compromise  of  its  full  penalty  when  upon 
the  certificates  of  the  Treasury  Agent,  the  District  Attorney,  and  Solicitor  of  the 
Treasury,  he  believes  it  proper  and  for  the  interest  of  the  Government  to  do  so. 

The  Alleged  Errors. 

Having  come  to  this  final  conclusion,  the  Government  examined  all  our  in- 
voices for  a  period  of  five  years,  and  from  the  whole  number,  representing  an 
importation  of  at  least  forty  millions,  and  on  which  duties  to  the  extent  of  up- 
wards of  eight  millions  had  been  paid,  selected  about  fifty,  which  by  reason  of 
the  memorandum  slips  were  held  to  be  vitiated.  The  aggregate  value  of  all  the 
goods  included  under  this  number  of  invoices  was  estimated  to  be  about  one 
million  dollars,  and  as  it  was  claimed  that  the  Government  had  the  right,  after 
establishing  illegality  in  the  smallest  particular,  to  confiscate  every  item  of  such 
invoices,  a  pro  forma  suit  for  the  above  sum  was  instituted  against  us.  The 
aggregate  value,  on  the  other  hanil,  of  the  several  items  in  the  fifty  invoices 
alleged  to  be  vitiated,  amounted,  when  taken  separately,  to  $271,017.23;  and 
by  the  payment  of  this  sum  the  suit  and  all  claims  of  the  Government  were 
subsequently  settled. 

But  it  should  not  at  the  same  time  escape  attention  that  the  amount  of  alleged 
errors  of  these  several  items,  whose  aggregate  value  was  $271,000,  was  in  itself 
a  comparatively  small  sum,  not  exceeding  ten  to  fifteen  thousand  dollars  if  esti- 
mated at  the  maximum,  and  tliat  of  this  sum  the  duties  which  could  have 
possibly  accrued  to  the  Government  constituted  but  a  fraction.  In  short,  if  they 
had  been  assessed  at  the  maximum  rate  imposed  since  1863,  the  amount  would 
liave  been  less  than  four  thousand  dollars,  but  in  fact  we  are  given  to  understand 


10  THE  CASE  OF  PHELPS,  DoDGE  &  CO. 

that  the  whole  amount  of  loss  which,  after  a  careful  examination  of  our  book??, 
it  can  be  claimed  that  the  Government  has  sustained  by  reason  of  the  above 
irregularities  whereof  we  have  been  accused,  (not  taking  into  consideration  the 
cases  where  we  had  paid  on  over-valuations),  is  not  in  excess  of  two  thousand 
dollars;  or,  to  put  the  matter  still  differently,  if  the  case  had  been  one  between  two 
merchants^  covering  a  space  of  five  years  and  involving  transactions  to  the  extent 
of  $40,000,000,  (and  considering  only  the  invoices  in  question)^  the  supposed 
discrepancies  of  account  could  have  been  satisfactorily  settled  by  the  payment  on 
our  part  of  from  two  to  four  thousand  dollars  ;  but  in  the  case  of  the  Govern- 
ment and  the  merchant  the  former  can  only  be  satisfied  under  existing  laws  by  the 
payjnent  of  $271,000,  and  can  further  claim  to  have  acted  generously  inasmuch 
as  it  did  not  take  from  us  a  million. 

An  Example. 

As  further  proof  and  illustration  of  our  statements  we  give  the  following  ex- 
ample of  one  of  the  memoranda  returned  to  us  by  the  authorities  after  settlement, 
and  regarded  by  them  as  fully  conclusive  against  us :  Fn  July,  1871,  we  received 
per  steamer  Algeria  an  invoice  of  2,194  boxes  tin  plates,  included  under  which 
was  a  lot  of  174  boxes  of  odd  sizes,  24x24  XXXX,  and  24x1 3 J  XX,  (marks 
which  the  trade  will  understand),  the  remnant  of  an  old  and  special  contract. 
Ail  these  goods,  it  is  admitted  by  the  Government,  were  invoiced  at  their  true 
market  value  at  the  time  of  shipment,  were  so  certified  by  the  Consul  at  Liver- 
pool, and  so  passed  after  examination  by  the  appraiser  in  New  York.  But  there 
was,  in  addition,  a  memorandum  transmitted  apprising  us  that  174  boxes,  in  vir- 
tue of  an  old  contract,  would  be  charged  to  the  Liverpool  house  at  a  price  which 
differed  from  the  then  actual  market  value  to  the  extent  of  about  a  sixpence  per 
box.  The  total  value  of  the  whole  invoice  was  £3,237  :  14s.  The  total  value 
of  the  174  boxes  was  £293  :  45.  :  2r/.,  and  the  difference  between  the  actual 
market  value  of  these  last  and  their  contract  cost  was  £4  :  7s.,  on  which  difference 
the  duty  of  25  per  cent,  would  have  amounted  to  £l  :  Is. :  9d.,  or  a  little  more 
than  five  dollars.  And  yet,  on  account  of  this  small  difference  in  the  general  set- 
tlement, as  a  penalty  we  paid  the  full  value  of  174  boxes,  namely,  £293  :  4s. :  2d., 
or  upwards  of  fourteen  hundred  dollars.  And  thus  the  delinquencies  ran  through- 
out the  whole  extraordinary  transaction. 

But  in  admitting  these  irregularities,  we  do  not  admit  that  the  Government 
by  reason  of  the  same  has  really  sustained  even  the  trifling  loss  that  has  been 
estimated;  for  the  very  principle  which  caused  a  few  items  to  be  irregularly  in- 
voiced led  to  errors  against  us  and  in  Aivor  of  the  (government  of  many  times 
the  amount  churned  to  have  been  lost  by  the  customs;  one  single  contract  during 


STATEMENT  OF  THE  FIRM.  11 

the  past  year,  for  special  brands  and  sizes  which  cost  net,  £42,889  :  65.,  having 
been  invoiced  to  us  at  £54,655  :  lis.,  and  passed  for  the  payment  of  duties  at  the 
Custom  House  at  such  later  valuation. 

In  view  of  these  facts,  it  is  also  proper  for  us  to  state  why  we  were  induced  to 
yield  to  rather  than  contest  the  demands  of  the  Government  when  we  found  they 
were  resolved  upon. 

And  first  and  foremost,  we  regarded  it  as  a  question  for  the  Government  to 
determine^  whether  the  enormous  forfeitures  incurred  by  us,  without  design  or 
motive  of  fraud,  misstatement,  or  concealment,  were  to  be  exacted  because  it  was 
so  written  in  the  law,  or  were  to  be  adjusted  rather  to  the  actual  »iuality  of  the 
transaction.  But  when  tlie  measure  of  forfeiture  finally  exacted  was  insisted 
upon,  and  its  legality  was  treated  as  e([uivalent  to  its  justice,  our  own  sense  of 
its  injustice  and  oppression  could  not  relieve  us  from  the  necessity,  in  which  we 
had  before  placed  ourselves,  of  accepting  the  Government  measure  of  its  rights 
and  our  obligation^  It  may  be  true  that  in  our  confidence  in  our  rectitude,  and 
in  the  justice  of  the  Government,  we  had  not  given  due  attention  to  the  disturb- 
ing element  introduced  into  the  dealings  of  the  Government  with  its  citizens,  by 
the  inmiense  private  interests  of  revenue  officers  and  informers  which  our  system 
has  created  and  tolerates. 

A  second  and  subordinate  consideration,  but  one  of  much  weight,  especially 
with  the  senior  members  of  the  firm,  confirmed  us  in  disposing  of  the  case  by 
settlement  rather  than  by  controversy.  In  the  whole  long  course  of  our  business 
it  has  been  at  once  our  fortune  and  our  pride  to  have  had  no  serious  litigations  ; 
and  that  this  enviable  record  should  not  be  interrupted  by  long  and  l)itter  contro- 
versy with  the  Government  seemed  but  justly  within  our  choice,  provided  th(? 
sacrifice  made  to  secure  it  was,  as  it  has  been,  wholly  our  own.  And  if  there 
are  any  who  may  be  inclined  to  judge  us  harshly  for  such  a  decision,  we  would 
ask  them  to  recall  to  mind  the  peculiar  rigor  of  our  present  tariff  law ;  the  enor- 
mous confiscations  which  it  is  allowed  to  the  Government  to  make  under  it,  and 
furthermore,  that  during  the  whole  continuance  of  the  suit  our  books  and  papers 
would  be  under  the  control  of  the  authorities,  and  our  business  be  liable  to  be 
interrupted  and  our  credit  affected  by  rumors  and  misrepresentations,  which  it 
would  be  exceedingly  difficult,  if  not  wholly  impossible,  to  at  once  refute  or  . 
answer. 

Conclusion. 

In  view,  then,  of  this  statement,  the  correctness  of  which  we  believe  the 
officers  of  the  Government  will  afiirm  in  every  essential  particular,  and  in  support 
of  which  we  append  letters  from  the  special  agent  of  tfie  Treasury  Department, 
the  Consul  at  Liverpool,  who  for  twelve  years  certified  to  the  correctness  of  our 


12  THE  CASE  OP  PHELPS,  DODGE  k   CO. 

invoices,  and  the  gentleman  wlio  at  the  inception  of  the  suit  against  us  filled  the 
office  of  the  United  States  District  Attorney,  we  will  ask  the  Press,  we  will 
appeal  to  the  great  masses  who  know  us  and  who  do  not  know  us,  whether  it  is 
probable  that  a  firm  which  pays  annually  to  the  Government  hundreds  of 
thousands  of  dollars  in  duties,  whose  total  business  transactions  are  measured 
annually  by  millions,  would  knowingly,  willfully,  and  systematically  defraud  the 
revenue  by  short-paid  duties  to  the  extent  of  a  few  thousand  dollars  extended 
over  a  period  of  five  years  ?  And  we  further  respectfully  ask  the  Press,  and 
the  Community,  which  may  have  prejudged  us,  whether,  after  so  many  years  of 
honorable  life  and  unsullied  reputation,  such  a  calumny  against  us  can  be  believed 
and  accepted  ? 

And  on  this  statement,  and  asking  attention  to  the  letters  which  we  annex,  we 
submit  our  case  to  the  just  judgment  of  our  friends  and  the  public. 

April  15,  1873.  PHELPS,  DODGE  &  CO. 


No.  1. 

Letter  from  Hon.  NOAH  DAVIS,  late  TJ.  IS.  District  Attorney, 
and  now  Judge  of  the  Supreme  Court  of  the  State  of  New  Yorh  : 

New  York,  April  11,   1873. 
Messrs.  Phelps,  Dodge  &  Co. : 
Gentlemen  : 

I  have  received  yours  of  the  9th  instant,  asking  me,  now  that  the  proceeding 
recently  taken  against  you  by  the  Government  has  resulted  in  a  final  settlement, 
to  give  you  a  statement  in  relation  to  the  claim  made  against  you,  and  the 
manner  in  which  it  was  met  and  adjusted  by  you,  and  such  other  matters  in  con- 
nection therewith  as  I  may  feel  at  liberty  to  communicate.  As  an  act  of  justice 
toward  you  I  think  it  my  duty  to  comply  with  the  request. 

Information  in  the  case  was  first  given  to  B.  G.  Jayne,  Esq.,  special  agent  of 
the  Treasury  Department.  At  this  time  I  was  the  United  States  Attorney  for 
this  District — the  officer  charged  with  the  duty  of  conducting  legal  proceedings 
in  such  cases.  After  Mr.  Jayne  had  partially  investigated  the  case,  he  laid  the 
facts  and  papers  then  in  his  possession  before  me.  I  examined  them,  and  came 
to  the  conclusion  that  they  were  sufficient  to  justify  a  more  thorough  investi- 
gation. I  requested  that  some  of  the  leading  members  of  your  house  should  be 
invited  to  come  to  the  Custom  House,  that  I  might  have  a  personal  interview 


STATEMENT  OF  THE  FIRM.  13 

wtth  them.  Mr.  William  E.  Dodge  and  Mr.  James  came  in  response  to  the 
Collector's  message,  and  evidently  without  the  slightest  idea  of  its  object.  I 
stated  to  them  the  charges  that  had  been  made,  the  grounds  on  which  they  were 
based,  and  the  steps  that  had  been  taken,  and  my  conclusion  that  a  full  investi- 
gation ought  to  be  had.  Those  gentlemen  took  the  matter  in  a  spirit  of  most 
perfect  fairness  and  frankness,  inviting  the  closest  scrutiny,  and  offering,  without 
reserve,  to  place  at  once  in  the  hands  of  myself  or  the  other  officers  of  the 
Government  all  the  books  and  papers  of  the  firm  that  might  be  desired,  and  to 
afford  every  facility  in  their  power  to  an  intpiiry  into  all  their  dealings  with  the 
Custom  House,  asserting  that  if  any  irregularity  existed  in  the  dealings  of  your 
house  with  the  Government  it  was  unknown  to  them  and  wholly  unintentional. 
They  also  expressed  themselves,  on  behalf  of  their  firm,  ready  and  willing,  if 
there  had  been  any  irregularity,  to  pay  not  only  what  the  Government  miglit 
have  lost  by  reason  thereof,  but  any  penalty  to  wliich  they  had  inadvertently 
subjected  themselves.  I  suggested  that  Mr.  Jayne,  with  such  assistance  as  he 
might  need,  should  go  with  them  to  their  place  of  business  and  receive  whatever 
books  and  papers  he  should  desire.  To  this  they  promptly  acceded,  and  Mr. 
Jayne  did  accompany  them  and  was  put  into  possession  of  the  books  and  papers, 
and  the  process  for  books  and  papers  which  had  been  obtained  was  withheld  by 
me  from  service.  A  full  and  careful  examination  was  then  made  by  and  under 
the  supervision  of  Mr.  Jayne,  he  having  access  to  all  your  books  and  papers  and 
possession  of  all  that  were  deemed  necessary  to  enable  him  to  ascertain  the  facts. 
I  was  advised  from  time  to  time  of  the  progress  of  the  investigation,  and  when 
it  was  concluded  I  examined  the  papers  and  documents  presented  to  me,  contain- 
ing the  case  of  the  Government.  From  tliis  examination  I  became  satisfied  that 
there  had  been  during  the  past  five  years  a  considerable  number  of  violations  of 
the  customs  revenue  laws  by  your  house,  all  alike  in  their  character ;  but  that 
those  violations  had  occurred  without  any  actual  intent  on  your  part  to  defraud 
the  revenue.  The  infractions  of  the  statute  were,  however,  of  such  a  character 
as  left  exposed  to  forfeiture  invoices  of  goods  to  the  amount  of  about  one  million 
of  dollars.  On  conferring  with  your  counsel  I  found  you  still  desirous  to  meet 
and  adjust  the  matter  on  any  basis  that  would  cover  any  fair  claim  for  duties 
or  penalties  that  the  Government  thought  proper  to  enforce.  I  myself  suggested, 
without  knowing  what  the  amount  would  be,  that  the  value  of  the  articles  in  the 
several  invoices  actually  affected  by  the  alleged  undervaluation  should  be  ascer- 
tained, and  that  the  amount  so  found  should  be  taken  as  the  basis  of  the  settle- 
ment. The  suggestion  was  accepted,  and  the  amount  was  approximately  ascer- 
tained at  about  ^260,000.  It  was  then  arranged  between  your  counsel  and 
myself  that  a  suit  should  be  commenced,  and  that  the  sum  arrived  at  should  be 
at  once  paid  into  court  as  a  settlement  of  the  claims.     At  that  stage  of  the  trans- 


14  THE  CASE  OF  PHELPS,  DODGE  k   CO. 

action  my  term  of  office  expired ;  but  I  understood  that  a  suit  was  commenced 
by  my  successor,  which  has  been  compromised  on  the  basis  arranged  with  me  at 
the  value  of  the  articles  mentioned,  as  afterwards  ascertained. 

[f  I  had  come  to  the  conclusion  tliat  you  had  acted  with  an  actual  design  to 
defraud  the  Government  I  should  have  insisted  upon  the  forfeiture,  not  only  of 
the  value  of  the  articles  above  referred  to,  but  of  the  entire  invoices  of  which 
they  formed  a  part,  amounting  to  fully  one  milHon  of  dollars ;  but  my  examina- 
tion, with  the  explanations  made  to  me  by  you,  showed  clearly,  as  I  thought 
and  still  think,  that  the  idea  of  defrauding  the  Government  of  its  lawful  duties 
had  never  entered  your  minds,  while  doing  a  portion  of  your  business  in  a  man- 
ner which  the  courts  would  declare  to  be  in  conflict  with  the  statutes.  I  was 
confirmed  in  this  by  the  very  meagre  amount  of  duties  lost  to  the  Government. 
In  a  business  with  you  of  many  millions  of  dollars,  during  the  period  of  five 
years  in  which  the  alleged  irregularities  occurred,  and  during  which  you  had  paid 
to  the  Government  several  millions  of  dollars  in  duties,  the  whole  amount  lost 
by  the  alleged  fraud  fell  short  of  three  thousand  dollars. 

I  have  since  learned  (a  fact  which  I  did  not  know  at  the  time)  that  by  apply- 
ing the  same  rule  of  valuation  adopted  by  you,  and  which  in  the  instances  covered 
by  the  settlement  resulted  in  an  undervaluation  of  the  same  goods  in  other  in- 
voices imported  during  the  same  period,  the  result  has  in  those  cases  been  an 
overvaluation,  upon  which  the  Government  received  duties  beyond  what  would 
have  been  payable  under  the  correct  rule  of  valuation  to  an  amount  very  con- 
siderably in  excess  of  the  duties  lost.  This  fact  has  cofirmed  my  conviction  of 
your  entire  innocence  in  the  whole  business  of  any  actual  intent  to  defraud. 

In  conclusion,  I  beg  leave  to  add  that  during  my  connection  with  the  office  of 
United'  States  Attorney  I  knew  of  no  case  in  which  such  a  prompt  and  earnest 
desire  to  court  and  aid  investigation,  to  correct  any  error,  and  right  every  wrong 
that  might  apjiear  to  have  been  done  to  the  Government  or  its  revenues,  was 
manifested,  as  that  constantly  shown  in  yours. 

J  am,  very  respectfully,  yours, 

NO  ATI  DAVIS. 


No.  2. 


Offioe  of  R.  G.  Jayne,  Spkcial  Agent   CJ.  S.  Treasury  Dep't, 

Custom  House,   New   York,  March  31,  1873. 
Hon.  Wm.  K.  Do  doe  : 
Dear  Sir  : 
The  suit  brought  against  your  firm  for  one  million  dollars  was  not  for  duties 
but  for  tiie  value  of  certain  invoices. 


STATEMENT  OF  THE  FIRM.  15 

In  these  invoices  the  price  of  a  portion  of  the  merchandise  was  stated  below 
the  purchase  price. 

The  value  of  that  portion  of  the  invoices  upon  which  tlic  value  was  under- 
stated amounted,  when  taken  separately,  to  $271,017.23,  the  sum  paid  by  your 
firm.  The  duties  lost  by  the  Government  by  the  undervaluation  were  but  a 
fraction  of  the  sum  paid. 

Many  charges  made  i?i  the  public  prints  against  your  firm  had  no  foundation 
in  truth. 

Very  res[)ectnil]y,  your  ob't  servant, 
[Signed]  B.  O.  JAYNK. 


No.  3. 

Camdkn,  N.  J.,  April  W,  1S7:J. 
Gentlemen  : 
In  reply  to  yours  of  yesterday,  I  have  to  say  that  during  the  time  I  was  Con- 
sul at  Liverpool  there  was  every  di.«position  shown  by  the  house  of  Vhelps, 
James  &  Co,  to  comply  witii  the  lievenue  Laws  in  making  out  their  invoices. 
In  fact,  no  liouse  there  seemed  more  solicitous  aud  scrupulous  in  this  particular 
than  did  this  house.  Mr.  Jamcp,  the  senior  member  of  this  firm,  used  frequently 
to  consult  with  me  as  to  the  mode  of  n:aking  them  out,  and  the  prices  or  values 
to  be  stated. 

There  were  very  oflen  difliculties  experienced  on  the  part  of  exporters  as  to 
the  sums  or  prices  to  be  inserted  when  there  were  long  running  contracts  for  the 
delivery  of  goods,  and  this  liouso  alwnys  had  contracts  running. 

I  never  saw  any  disposition  on  their  j)art  to  violate  the  law  in  any  particular, 
and  I  do  not  think  they  ever  did  so  intentionally. 

Very  truly  yours,  etc., 

THOMAS  H.  DUDLEY. 
Phelps,   Dodge  &  Co. 


IG 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


COMMENTS  OF  THE  PRESS. 


[From  The  New  York  Times,  April  16, 1873.] 

Messrs.  PHELPS,  DODGE  &  CO. 

The  statement  which  we  publish  this 
morning  from  Messrs.  Phelps,  Dodge  &  Co., 
in  regard  to  their  case  with  the  Government, 
must  strike  every  impartial  mind  as  candid, 
clear,  and  convincing.  It  forms  a  sad  evidence 
of  how  ready  a  certain  class  of  our  people  are 
to  join  in  a  cry  of  calumny  against  honored 
names,  and  it  ought  to  show  to  a  portion  of 
the  Press  of  the  country  what  a  cruel  wrong 
they  have  done  to  this  respected  firm,  by 
accusations  where  "  the  other  side  "  was  never 
heard.  Messrs.  Phelps,  Dodge  &  Co.,  it 
must  be  remembered,  have  the  largest  business 
in  metals  probably  of  any  mercantile  house  in 
the  world.  During  the  past  five  years  they 
have  imported  over  $40,000,000  worth  of 
these  products,  on  which  they  have  paid  du- 
ties of  over  $8,000,000.  The  whole  amount 
of  irregularities  charged  against  them  during 
this  period  by  the  Government  is  only  about 
$2,000,  and  this  without  any  suspicion  of  fraud 
or  intention  to  evade  the  law  on  their  part. 

Their  difficulties  arose  from  the  complicated 
nature  of  the  Revenue  laws,  and  from  the 
enormous  range  of  their  transactions.  This 
house  imports  largely  of  tin  plate.  The  tariff 
provides  that  the  duties  on  this  article  shall 
be  assessed  on  its  "  actual  market  value  "  in 
foreign  countries  at  the  period  of  exportation ; 
but  another  act  requires  that  the  invoice  must 
also  declare  its  "actual  cost."  There  is  no 
difficulty,  of  course,  in  ascertaining  the  market 
value,  and  it  was  never  charged  against  this 
firm  that  they  had  ever  passed  any  goods 
through  the  Custom-House,  except  at  their 
fair  market  value.  The  only  question  was,  as 
to  the  "  actual  cost "  of  the  tin  plate  imported. 
This  was  not  easy  to  ascertain.  In  cases  of 
irregular  or  extra  lots,  the  goods  were  often 
remnants  of  contracts  delivered  long  after  the 
time  agreed  upon,  when  a  deduction  was 
probable  from  nonfulfillment  of  contract,  and, 
therefore,  where  cost  itself  could  not  be  fixed 
till  after  a  considerable  time.  These  goods 
came  into  I/iveipool,  consigned  to  the  firm,  in 
many  ditleront  h)ts  every  day,  from  various 
makers,  hiuI  under  conditional  and  long-con- 
tinued contracts.  Tiiey  had  all  to  be  invoiced 
and  their  actual  cost  determined,  often  on  the 
very  day  of  the  steamer's  sallmg.  Under  these 
circumstiinces  of  uncertainty  and  haste,  the 
Liverpool  house  was  in  the  practice  of  meeting 


the  difficulty  of  the  law  by  a  proceeding  which 
seems  perfectly  fiiir  and  just.  They  marked 
up  the  small  items  in  the  invoice  where  market 
value  had  advanced  over  cost,  and  they  made 
a  reduction  where  market  value  had  declined 
below  cost.  That  this  was  perfectly  fair  to 
the  Government  is  evident  from  the  fact  that 
Messrs.  Phelps,  Dodge  &  Co.,  during  the  past 
five  years,  have  overpaid  to  the  Government 
much  more  than  they  have  underpaid.  In 
one  instance,  during  the  past  year,  they  im- 
ported one  lot  on  a  single  contract  of  certain 
special  brands,  and  invoiced  them  for  duties 
at  £54,655,  wliile  the  actual  cost  was  only 
£42,889,  thus  overpaying  the  Government  on 
that  importation  alone  some  $60,000.  Judge 
Davis  rightly  says,  in  a  letter  published  in 
another  column,  that  this  foct  alone  confirms 
his  conviction  of  their  "  entire  innocence,  in 
the  whole  business,  of  any  actual  intent  to 
defraud." 

Unfortunately  for  the  house,  the  small 
memoranda  and  copies  of  the  bills  of  the 
actual  cost  were  sent  out  by  the  Liverpool  firm, 
their  object  being  merely  to  give  information 
as  to  what  the  original  contracts  were.  They 
were  not  treated  as  in  any  way  confidential  or 
important  communications,  but  were  pinned 
by  an  ordinary  assistant  clerk,  without  con- 
cealment, in  one  of  their  foreign  invoice-books. 
This  man  had  been  rescued  by  a  member  of 
the  firm  from  poverty  and  starvation,  and  had 
been  placed,  as  an  act  of  charity,  in  this 
position  of  clerk.  As  a  return  for  their  kind- 
ness, stimulated  by  the  enormous  bribes 
ottered  by  the  Revenue  laws,  he  secretly  re- 
moved these  memoranda  from  the  invoice- 
book,  destroying  those  which  showed  where 
the  Government  had  been  benefited,  and 
preserving  those  where  a  small  advantage  had 
accrued  to  the  firm.  These  memoranda  he 
took  to  the  detective  officers. 

It  is  these  memoranda  which  the  Revenue 
officials  choose  to  consider  as  "  duplicate 
invoices,"  and  on  which  the  whole  charge  of 
fraud  is  l).ised.  How  unjustly  the  facts  which 
they  give  tell  against  the  house  may  be  judged 
from  the  following  instance  :  In  July,  lS71, 
they  imported  a  lot  of  2,194  boxes  of  tin 
plates,  among  which  was  a  lot  of  1*74  boxes 
of  odd  sizes.  All  these  goods  were  admitted 
to  be  invoiced  at  their  true  market  value,  but 
among  the  memoranda  mentioned  above  there 
was  one  stating  that  the  174  boxes  would,  on 
account  of  an  old  contract,  be  charged  to  the 


COMMENTS  OF  THE  PRESS. 


17 


Liverpoolhou.se  at  about  sixpence  per  box  less 
than  the  market  value.  The  difference  between 
the  market  value  ajid  the  cost  amounted  to  about 
$*22,  on  which  the  duty  would  have  been  about 
$5.  Yet  for  this  smail  difference  the  Govern- 
ment inflicted  on  the  firm  the  i)enalt)'  of  the 
full  value  of  the  174  boxes,  or  about  $1,40<». 
In  like  maimer  all  their  other  invoices  were 
vitiated  where  there  were  these  small  irrej^u- 
laritics,  so  that  under  the  interpretation  of  the 
law  made  by  the  Revenue  officers  they  could 
have  been  fined  $1,(  ►00,000,  though  the  losses 
suffered  by  the  Government  only  amounted  to 
$2,000.  The  officials,  however,  compromised, 
on  1^271,000. 

The  only  mistitkc  made  by  the  firm  in  this 
matter  was  in  compromising  at  all.  They 
should  have  suffered  the  case  to  go  to  the 
courts,  where  they  would  undoubtedly  have 
been  mulcted  only  to  the  amount  of  the  direct 
losses  to  the  Government,  which,  as  we  have 
said  before,  were  only  some  $2,(M)(».  Their 
reasons  for  compromising  will  be  easily  appre- 
ciated by  the  mercantile  conununity.  Their 
books  and  papers,  during  the  whole  suit,  would  j 
have  been  under  the  control  of  the  authorities. 
Their  business  would  have  been  interrupted, 
their  credit  injured,  and  thus  enormous  losses 
caused  to  them.  They  were  surrounded  by 
spies  and  informers.  Tiie  Tariff'  laws  are  ex- 
ceedingly conjplicati'd  and  o|)pressive,  and  it 
might  well  be  possible  that  otlier  mistakes  had 
been  made  by  them  which  could  be  taken 
advantage  of  by  officials  who  were  seeking 
their  ruin.  They  had,  too,  the  feeling  natural 
to  honorable  merchants,  that  in  dealing  witli 
the  Government  they  were  dealing  with  a  gen- 
erous master,  who  woidd  not  take  advantage 
of  a  legal  technicality  to  ilo  injustice.  That 
they  committed  the  error  of  undue  confidence 
in  the  Govennnent  is,  after  all,  more  to  their 
credit  than  to  thefi-  dishonor.  Whatever  pe- 
cuniary losses  tills  house  may  have  suffered  in 
this  transaction,  the  general  unprejutllced 
public  will  ac(|uit  them  of  all  intention  to 
defraud  the  (Jovernment  or  to  evade  the  law. 
Their  character  stands  as  pure  and  unsullied 
as  it  has  always  done  during  the  past. 


THE  LNFORMEirS  TRADE. 


[From  an  Editorial  in  The  Nkw  York  Timrs, 
April  27,  1S73.] 

The  most  profitable  employment  now  in 
New-York  is  that  of  informer.  A  business 
whose  success  was  one  of  the  woi-st  signs  of 
the  decay  of  imperial  Rome  is  now  extremely 
thriving  in  this  City.  A  numerous  band  of 
unprincipled  vagabonds  hang  about  our  mer- 


chants' counting-rooms  and  the  Custom-House, 
and  watch  and  study  how  they  may  detect  and 
make  use  of  some  omission  or  unintentional 
violation  of  the  often  contradictory  and  com- 
plicated revenue  laws.  These  degraded  inform- 
ers are  in  constant  consultation  with  those 
lawyers  who  are  always  ready  to  nmke  money 
out  of  these  wretched  ca.ses,  and  who  know  how 
to  frighten  the  honorable  merchant  into  some 
settlement  or  compromise,  whose  fruits  must 
go  largely  into  their  pockets. 

«  *  «  «  » 

We  are  informed  that  this  villainous  pro- 
fessirm,  stimulated  by  the  plunder  won  in 
the  Dodge  case,  are  very  busy  now  around  the 
Custom-House  and  in  many  a  counting-room. 
They  bribe  weak  clerks  and  pay  unprincipled 
subordinates.  Every  merchant  in  large  affairs 
is  surrounded  now  by  a  network  of  misemblc 
conspiracy.  Of  course,  the  first  and  safest 
way  is  to  have  every  dealing  with  the  (iovern- 
ment  so  clear  ami  ujuight  that  the  whole  world 
might  see  it.  Rut  if,  beyond  this,  there  arc 
provisions  so  difficult  and  cotitradictory  that 
no  human  foresight  could  avoid  mistjikes  in 
them,  then,  when  such  errors  are  picked  out 
by  the  informers  and  detectives,  let  them  go 
to  the  courts. 

[Fiom  the  N.  Y.  Jouksal  or  Commbrcr,  April 

16,  1878.] 

We  present  below  a  full  and  complete  state- 
ment, by  the  parties  most  deeply  interested,  of 
the  celel)rated  case  which  recently  attracted 
so  much  attention.  It  is  impossible,  we  think, 
for  any  candid  reader  to  believe  that  the  firm 
in  (piestion  had  any  intention  to  defraud  the 
Keveiuie.  The  whole  system  of  confiscations 
for  alleged  under-valuations  is  wrong,  and 
adroitly  administered  is  one  of  the  most  pow- 
erful black-mailing  agencies  in  existence. 
There  is  a  frankness  about  the  annexed 
comnmnication  which  will  commend  it  to  all 
who  are  interested. 


[From  the  N.  Y.  Evsnimg  Post,  April  10, 187a] 

THE  CASE  OF  PHELPS,  DODGE  &  CO. 

Messrs.  Phelps,  Dodge  &  Co.  have  to-day 
given  to  the  public  a  statement  of  the  matter 
in  controvei-sy  between  them  and  the  Govern- 
ment, wherein  they  were  charged  Avith  de- 
frauding the  Revenue,  and  in  settlement  of 
which  they  have  paid  into  the  Treasury  of  the 
United  States  about  $271,000.  The  case  is  a 
peculiar  one  and  worth  comprehending,  and 
they  ask  that  the  circumstances  surrounding 
it  may  have  a  candid  and  unprejudiced  con- 
sideration.    To  this  they  are  entitled,  not  only 


18 


THE  CASE  OF  rilELPS,  DODGE  &  CO. 


ill  coniinon  justice,  but  because  of"  the 
counuerciul  reputation  and  character  wliich 
have  always  belonged  to  their  house. 

There  are  two  questions  involved :  first, 
Was  there  any  intentional  fraud  on  the  part 
of  Phelps,  Dodge  &  Co.?  and,  second.  Is  there 
anything  in  the  wording  and  possible  construc- 
tion of  the  Tariff  laws  which  might  lead  them 
into  error  and  unintentional  violation  of  the 
law  ?  If  the  latter  shall  prove  to  be  the  case 
it  follows,  of  course,  that  the  house  must  be 
acquitted  of  the  charge  contained  in  the  former. 

That  difficulties  may  arise  in  complying 
with  the  law  in  the  making  of  invoices  seems 
l)lain  enough.  Thus,  the  invoice  must  declare 
the  actual  cost  of  the  goods  exported,  though 
the  duty  assessed  upon  them  is  according  to 
their  actual  market  value  at  the  time  and  place 
of  shipment.  But  the  certificate  of  the  consul 
at  the  port  of  shipment  is  to  the  effect  that  he 
believes  the  declaration  of  the  shipper,  and 
that  the  invoice  also  gives  the  actual  market 
value  of  the  goods,  although  the  merchant  is 
i-equired  to  give  the  cost,  which  may  be  a  very 
different  thing  from  the  value  to  which  the 
consul  certifies  !  That  mistakes  should  arise 
under  this  stupid  complication  is  not  singular. 
It  is  quite  possible  that  the  merchant,  who  is 
receiving  goods  manufactured  on  a  long-stand- 
ing contract,  depending  on  the  changing  cost 
from  time  to  time  of  the  raw  material,  may 
not  know  the  actual  cost  of  the  manufactured 
article,  and  honestly  estimates  it,  therefore, 
with  the  assent  of  the  consul,  at  the  market 
value,  which  is  the  thing  to  wliich  the  consul 
is  required  to  certify.  That  such  a  system 
opens  the  way  to  fraud  seems  plain  enough ; 
but  that  it  may  also  give  rise  to  mistakes  is 
ecjually  plain,  even  where  there  is  the  best 
intention  to  comply  with  the  law. 

The  importations  of  Phel])S,  Dodge  &  Co. 
during  the  five  years  over  which  it  is  alleged 
their  frauds  extended,  amounted  to  about  forty 
millions  of  dollars.  It  sometimes  happened 
that  their  invoices  included  articles — tin-plate 
— of  an  exceptional  character  in  size  and  shape, 
made  on  long-existing  contracts,  the  actual 
cost  of  which  might  not  be  known  to  the 
Liverpool  house,  but  which  must  be  invoiced 
and  sliip[)ed  innnediately  on  their  receipt  from 
the  manufactvu-ers.  The  late  consul  at  Liver- 
pool, Mr.  Dudley,  testifies  that  this  house  was 
always  more  than  usually  "  solicitous  and 
scrupulous  "  in  its  disposition  to  comply  with 
the  laws ;  that  the  senior  member  of  the  firm 
often  consulted  with  him  as  to  the  prices  or 
values  to  be  stated  in  the  invoices ;  that  ex- 
|)orter8  were  often  at  a  loss  to  know  what 
valuation  should  be  put  uj)on  goods  made  by 
running  contracts;  and  that  Pmkli's,  James  & 
Co.,  of  Liverpool,  always  had  such  contracts. 


In  cases  where  there  was  doubt  as  to  the 
actual  cost  of  the  goods,  the  habit  of  the 
Liverpool  house  was,  therefore,  to  invoice  at 
the  market  value  of  tin  plate,  that  is,  the  value 
on  which  duties  ai*e  calculated,  and  we  are 
assured  in  the  statement  now  given  to  the  pub- 
lic that  this  valuation  was  more  often  over  than 
under  actual  cost,  so  that  the  duties  paid  have 
been,  on  the  whole,  in  favor  of  and  not  against 
the  government.  The  actual  loss  to  the  rev- 
enue, it  is  stated,  for  the  whole  five  years,  and 
on  the  whole  importation  of  forty  millions  ol 
dollars,  is  only  from  two  to  four  thousand  dol- 
lars, while  the  excess  of  duty  paid  on  over- 
valuation is  a  much  larger  sum. 

It  so  happened,  however,  that  where  ship- 
ments were  made  of  these  goods  of  doubtful 
cost,  a  memorandum  or  manufacturer's  bill 
accompanied  or  followed  the  invoices  to  show 
that  they  were  remnants  of  old  contracts.  It 
would  unquestionably  have  been  better  if  the 
goods  had  been  invoiced  at  the  assumed  cost 
of  these  memoranda  or  bills,  but  as  they  were 
not  considered  as  showing  the  actual  cost,  the 
other  course  was  pursued,  as  we  have  just 
shown,  in  invoicing,  with  the  consul's  assent, 
their  supposed  market  value.  No  doubt  it  was 
a  mistake  to  thus  venture  to  attempt  to  comply 
with  the  spirit  of  the  law  by  disregarding  the 
technicality  of  the  letter,  however  absurd. 
But  as  it  was  a  mistake  made  in  good  faith, 
and  with  the  purpose  of  scrupulous  obedience 
to  the  law,  it  should  not  be  assumed  to  be  of 
fraudulent  intent.  It  is  impossible  to  believe 
it  to  be  so  when  not  only  was  nothing  to  be 
made  by  it,  but  the  system  was  actually  a 
losing  one. 

It  was  not  only  a  losing  one,  but  it  put 
Phelps,  Dodge  &  Co.  into  the  power  of  any 
one  who  could  show  it  to  be  constructive  fraud 
under  the  unjust  and  oppressive  laws  made  lor 
the  benefit  of  spies  and  infd^mers.  The  memo- 
randa which  the  house  thought  were  of  no 
value,  so  far  as  the  Custom  House  was  con- 
cerned, were  stolen  by  a  dishonest  and  dis- 
carded clerk  and  made  the  basis  of  a  chai-ge  of 
cheating  the  government  by  false  invoices  for 
a  period  of  five  yeai-s.  These  memoranda 
were  accepted  by  the  Treasury  Dei)artnieut  as 
duplicate  invoices,  although  they  referred  to 
single  items  among  many,  and  according  to  the 
law,  the  whole  amount  of  the  invoices  in  which 
such  items  appeared,  making  a  total  of  a  mil- 
lion of  dollars,  was  forleited. 

Now,  if  there  is  any  justice  or  reason  in  such 
a  law,  Messi-s.  Phelps,  Dodge  &  Co.  should  have 
been  made  to  pay  the  whole  sum.  But  as 
there  was  evidently  no  intention  of  fraud — and 
on  this  point  the  testimony  of  Judge  Davis, 
the  late  District  Attorney,  is  conclusive — a 
compromise  was  permitted.    Had  the  Treasury 


COMMENTS  OF  THE  PRESS. 


19 


Department  not  agreed  with  Judge  Davis  it 
could  not  have  honorably  consented  to  any 
such  arrangement,  for  that  would  have  been  to 
compound  a  felony.  There  was  then  really  no 
crime  that  called  for  the  enforcement  of  the 
law,  and  the  loss  of  the  government,  even  if  it 
had  gained  nothing  by  over- valuation  under 
the  system,  was  trifling.  But  although  a  mil- 
lion of  dollars  was  not  exacted,  it  was  necessary 
to  squeeze  out  of  the  unfortunate  merchants 
enough  to  satisfy  the  informer  and  the  half- 
dozen  government  olficei-s,  to  whom  whatever 
was  extorted — the  government  itself  getting 
little  or  nothing — was  to  go.  Messrs.  Phelps, 
Dodge  &  Co.  were  therefore,  mulcted  in  the 
sum  of  the  value  of  the  goods  invoiced  below 
cost,  amounting  to  ^271,<mM),  and  of  this  sum 
the  discarded  clerk  and  spy  received  $f»(>,OiM), 
and  the  larger  jjart  of  the  remainder  was  divi- 
ded among  those  fedei-al  oflicers  whose  interest 
it  is  to  insist  upon  the  enforcement  of  a  pen- 
alty— not  on  the  government's,  but  on  their 
own  behalf.  Of  course,  the  compronnse  is 
really  theirs ;  the  Trejusury  Department  must 
submit  to  their  dicUition,  and  the  mi^rchant,  if 
be  has  committed,  however  innocently,  any 
technical  infringement  of  the  law,  nmst  accept 
such  mercy  Jis  he  can  get. 

Such  are  the  results  of  our  Revenue  laws. 
Hy  their  blind  stupidity,  an  old  connnercial 
house  of  the  highest  sUmding  is  inveigled  into 
a  blunder  of  three  or  four  thou.sand  (U)llar8,  in 
importiitiims  amounting  to  forty  millions  dur- 
ing a  period  of  five  years,  and  is  compelled  to 
save  itrielf  the  loss  of  a  million  by  the  payment 
of  $271,000  for  the  !)ent'ftt  of  an  informer  and 
several  goverinnent  otticei-s.  The  tarilV  has 
already  driven  our  connnerce  from  the  seas ;  it 
is  in  a  fair  way  of  making  it  impossible  for  an 
honest  man  to  engage  in  any  trade  where  he  is 
at  the  mercy  of  laws  which  pretend  to  regulate 
the  duties  on  importations.  The  possible  pecu- 
niary loss  and  the  sjicrifice  of  reputation  to 
honorable  men,  mider  regulations  which  it  is 
exceedingly  diHicult  to  understJind  and  almost 
impossible  to  obey,  are  so  great  that  the  chan- 
ces are  that  trade  will  at  length  fall  into  the 
hands  of  unscrupulous  men  who  are  willing  to 
take  the  risk  because  they  have  no  charactei-s 
to  lose,  and  who  will  take  good  care  never  to 
have  any  pecuniary  responsibility. 


[From  the  N.  Y.  Kvknino  Post,  April  18,  1S73.J 
OBLIQUITIES  OF  THE  TARIFF. 

Every  merchant  of  this  city,  we  presume,  is 
satisfied  that  the  statement  made  two  or  three 
days  ago  by  Messrs.  Phelps,  Dodge  &  Co.  is 
not  only  a  complete  answer  to  the  charge  of 
fraud  brought  against  them,  but  that  their  case 


is  one  of  peculiar  hardship.  The  ditterence 
between  the  amount  of  duties  they  ought  to 
have  paid  and  that  they  did  pay  was  not  more 
than  four  thousjuul  dollai-s  in  a  period  of  five 
years,  while  to  ollset  this  there  had  been  an 
actual  payment  to  the  govermnent  of  a  larger 
sum  in  duties  from  an  over-valuation  in  the 
invoices  of  the  goods  in  (luestion.  In  cMjuity 
they  not  only  owed  the  government  nothing, 
but  the  government  was  strictly  in  their  debt. 
Why  then,  is  it  asked,  should  they  have  sub- 
mitted to  be  mulcted  in  so  large  a  sum  as 
|i27 1,000? 

The  answer  is  obvious  if  the  (juestion  is 
asked  seriously :  Because,  according  to  the 
letter  of  the  law,  they  were  liable  not  only  to 
the  value  of  the  particular  goods  which  had 
been  erroneously  invoiced,  but  to  the  whole 
amount  of  the  invoices  in  which  the  iten)s 
occurred,  and  had  the  law  been  strictly  enforced 
they  might  have  been  compelled  to  i)ay  a  mil- 
lion of  dollars.  Rather,  therefore,  than  to 
trust  to  the  uncertainty  of  a  lawsuit  where  it 
was  doubtful  if  the  ecpiity  of  the  ca.se  would 
be  permitted  to  rule  in  their  favor;  rather  than 
remain  for  an  indefinite  period  under  the 
stigma  of  a  charge  of  intentional  fraud  ;  and 
rather  than  submit  to  the  inconvenience  of 
being  deprived,  so  long  as  the  suit  continued, 
of  their  books  and  papei-s,  they  accepted  a 
compromise  which,  though  a  costly  settlement, 
enabled  them  at  once  to  make  an  appeal  to  the 
sense  of  justice  in  the  public,  and  leave  their 
commercial  reputation  without  a  blemi.sh.  That 
reputation  they  valued  more  than  they  did  a 
(juarter  of  a  million  of  dollarf,  and  fortunately 
they  are  able  to  pay  the  price. 

Merchants,  better  than  any  other  class  of  the 
community,  know  the  intricacy  and  uncertainty 
of  the  laws  under  which  spies  and  informers 
are  enabled  to  work  such  wrong  as  this,  both 
pecuniarily  and  iriorally,  upon  pei-sons  who  are 
guiltless  of  any  intenticuial  fraud.  The  acts 
regulating  the  tariff  upon  importations  are  of 
many  dates  within  a  period  of  half  a  century 
and  more,  aii<l  they  were  framed,  in  many 
intances,  perhaps  in  almost  all,  by  men  inno- 
cent of  any  knowle<lge  of  the  subject  about 
which  they  undertook  to  legislate.  To  put  a 
duty  of  ten  per  cent,  upon  flaxseed  and  admit 
linseed  free,  as  was  done  by  one  Congress,  is 
probably  by  no  means  a  solitary  instance  of 
similar  blunders ;  and  practical  men  are  often 
called  upon  to  deal  with  cases  where  it  is 
quite  as  difficult  to  reconcile  the  fact  with  the 
law. 

The  particular  case  of  Phelps,  Dodge  &  Co., 
we  are  confident,  is  a  much  more  connnon  one 
than  is  generally  supposed.  *  *  *  It  is  for 
such  cases  as  these  that  spies  and  informers, 
prompted  by  the  tariff  laws,  arc  continually  oii 


20 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


the  search  and  on  which  they  fatten.  A  mer- 
chant, however  scrupulous  he  may  be,  and 
however  desirous  he  may  be  to  comply  with 
the  very  letter  of  the  act,  may  come  to  grief 
by  an  erroneous  interpretation  of  the  law  as  to 
cost  and  market  values,  or  by  an  interpretation 
which  should  bring  him  into  conflict  with  laws 
which  may  be  twisted  into  having  more  than 
one  meaning.  He  knows  that  he  is  dogged  by 
men,  even  if  they  are  not  of  his  own  counting- 
house,  who  are  experts  in  detecting  technical 
violations  of  the  tariff  regulations,  and  who 
will  prove  him  to  have  been  a  rogue  in  spite  of 
the  best  intentions.  If  he  is  a  timid  man  he 
may  submit  to  the  exaction  of  blackmail;  if 
the  case  is  one  difficult  of  explanation,  he  pays 
any  sum  demanded  rather  than  suffer  an  expo- 
sure which  may  damage  his  reputation ;  at  best, 
however  disposed  to  take  bis  stand  upon  an 
unblemished  character  and  his  rights,  he  may, 
by  the  technicalities  of  a  law,  which  are  a  trap 
alike  to  the  unwary  and  the  careful,  be  com- 
pelled to  make  the  best  terms  he  can  with 
those  into  whose  power  he  has  unhappily  fallen. 
The  inevitable  result  must  be,  in  the  long  run, 
to  drive  honorable  men  out  of  business,  who 
will  not  take  such  chances  of  ruin  both  in 
1  eputation  and  purse,  and  put  it  into  the  hands 
of  unscrupulous  agents  of  foreign  houses,  who 
will  keep  no  books  and  cultivate  short  memo- 
ries. 


[From  the  N.  Y.  Evening  Post,  Ajyril  21,  1873.] 

WHAT  SHALL  WE  DO  ABOUT  IT? 

The  acts  regulating  the  imposition  of  duties 
upon  imports  are  scattered  through  the  statute 
books  for  nearly  three-quarters  of  a  century, 
and  those  most  familiar  with  them  assert  that 
so  intricate  and  sometimes  contradictory  are 
they,  that  it  is  not  only  difficult  to  reconcile, 
but  not  easy  to  comprehend  them.  *  *  * 
The  evil  is  become  so  manifest  in  the  wrong 
which  a  prominent  commercial  house  has  been 
made  to  suffer,  that  we  hope  men  of  both  par- 
ties will  give  to  the  subject  the  consideration  it 
deserves.  We  do  not  believe  that  any  candid 
man  can  doubt  that  the  statement  of  Phelps, 
Dodge  &  Co.  is  strictly  true — that  there  was 
not  on  their  part  the  slightest  intention  to  de- 
fraud the  government,  and  that  though  techni- 
cally in  fault  in  the  method  they  adopted  to 
invoice  certain  goods,  they  adopted  that  method 
in  the  belief  that  they  were  thereby  obeying 
the  spirit  of  the  law  in  cases  where  they  could 
not  keep  to  the  letter.  Practically  the  method 
was  so  far  from  defrauding  the  government 
that  the  cases  wherein  the  goods  were  at  an 
over-valuation  exceeded  those  wherein  they 
were  at  an  under-valuation,  so  that  In  equity 


the  government  was  in  debt  to  them  for  an 
excess  of  duties  paid,  rather  than  they  in  debt 
to  the  government  for  a  deficiency.  Had  the 
transaction  been  one  between  two  merchants, 
three  or  four  thousand  dollars  would  have  set- 
tled the  difference.  But  as  there  was  a  techni- 
cal evasion  of  the  law  the  house  was  compelled 
to  pay  $271,000. 

We  hold  such  a  result  to  be  simply  an  abuse 
of  the  law,  or,  to  speak  strictly,  an  abuse  which 
the  law  permits.  Mr.  Boutwell's  explanation, 
so  far  from  putting  any  better  aspect  upon  the 
question  for  the  government,  makes  it  worse, 
and  is  only  a  new  illustration  of  how  the  law 
is  used  as  an  instrument  of  torture.  If  inno- 
cence of  intention  was  worthy  of  weight,  then 
the  Secretary  of  the  Treasury  should,  in  a 
decent  regard  for  justice,  have  simply  required 
Phelps,  Dodge  &  Co.  to  pay  to  the  government 
only  the  actual  deficiency  of  duties  charged 
against  them.  To  compel  them  to  pay  the 
penalty  which  the  greedy  expectants  were  wait- 
ing here  to  divide,  while  the  innocence  of  the 
accused  was  acknowledged,  was  too  great  an 
outrage  to  be  ventured  upon.  The  way  was 
smooth  enough  if  a  confession  could  be  extort- 
ed. A  threat  of  a  lawsuit,  with  all  its  certain 
vexations  and  expenses,  and  the  possible  ver- 
dict against  the  house  of  an  enforced  payment 
of  a  million  of  dollars,  with  a  stigma  of  guilt 
affixed  by  a  legal  decision,  was  held  over  them 
on  the  one  hand  ;  on  the  other  was  an  imme- 
diate escape  from  the  difficulty  by  the  payment 
of  a  much  smaller  sum  than  the  law  might 
enforce,  on  the  condition  of  acknowledging 
that  the  fault  charged  had  been  committed. 
Technically,  according  to  the  official  construc- 
tion of  the  law  and  the  official  assumption  that 
certain  memoranda  were  duplicate  invoices, 
there  had  been  a  breach  of  the  law.  They 
could  not  deny  constructive  fraud,  but  whether 
they  were  wise  to  acknowledge  this  without 
insisting  at  the  same  time  upon  innocence  of 
intention,  that  they  might  escape  the  heavier 
penalty,  is  a  question  about  which  men  will 
differ.  But  that  they  were  put  in  so  tight  a 
place  by  the  Department,  only  shows  the  tre- 
mendous pressure  that  can  be  brought  upon  a 
merchant  who  falls  into  any  of  the  numberless 
traps  that  the  law  lays  for  him. 

The  evil  is  that  the  law  may  be  so  easily 
misunderstood  on  the  one  hand,  and  admits  of 
such  enormous  abuses  on  the  other.  We  cited 
a  day  or  two  ago  a  case  where,  had  it  fallen  in- 
to the  hands  of  an  informer,  or  Treasury  agent, 
a  forced  constitution  of  the  law  might  have 
mulcted  the  merchant  in  a  penalty  of  the 
whole  amount  of  the  invoice.  The  goods  were 
deliverable  on  contract,  and  were  invoiced  at 
cost.  But,  according  to  the  law,  they  were 
dutiable  at  the  market  price.     Market  price  is 


COMMENTS  OF  THE  PRESS. 


n 


the  price  at  which  goods  can  be  bought.  Be- 
fore this  contract  expired,  the  price  at  which 
these  goods  could  have  been  bought  under  a 
fresh  order  had  enhanced.  When  the  contract 
wiu<  al)out  to  expire  an<l  tlie  merchant  ordered 
more  goods,  lie  was  told  that  he  could  have  no 
more  at  that  rate  as  the  cost  of  manufacturing 
them  had  increased.  He  had  been  innocently 
receiving  goods  for  some  time  at  less  than 
their  market  vjilue,  and  paying  duty  accord- 
ingly. Does  anybody  suppose  that  he  would 
have  been  let  up  by  a  government  detective  on 
the  plea  of  non-intention  ? 

We  have  no  doubt  there  are  plenty  of  such 
cases  in  the  knowledge  of  importers.  Another 
of  a  similar  sort  has  been  told  us  within  a  day 
or  two.  A  merchant  ordered  of  a  manufac- 
turer in  England  all  that  he  could  make  of  a 
certain  class  of  goo<ls — made  by  nobody  else 
for  the  time  being — for  a  year.  He  invoiced 
them  at  cost,  and  there  were  no  others  in  mar- 
ket to  fix  any  other  price  upon  them.  It  hap- 
pened that  in  a  railroad  accident  some  of  these 
goods  were  damaged  and  afterward  sold  at  auc- 
tion. They  brought  a  nmch  higher  than  the 
contract  price — as  would  propably  have  been 
the  fact  with  the  goo<ls  in  the  other  case  re- 
ferred to  under  similar  circumstances — thus 
fixing  a  market  value  above  cost  price.  No 
detective  or  treasury  agent  happened  to  learn 
the  fact,  though  the  merchant  was  in  great 
trepidation  lest  one  should  do  so,  and  bring  a 
charge  against  him  of  undervaluing  his  impor- 
tations. In  both  these  cases  the  merchants 
wei-e  perfectly  innocent  of  any  intention  of 
fraud,  because  they  were  not  aware  of  any 
difference  between  the  cost  price  and  market 
value  of  their  goods.  Hut  in  both  ca.ses  spies 
and  detectives  would   have  found   enough  to 


base  a  charge  against  them  of  defrauding  the 
revenue. 

We  repeat  what  we  have  said  before — that 
the  law  is  capable  of  these  abuses;  and  the 
conspicuous  case  of  Phelps,  Dodge  &  Co. 
should  be  made  use  of  for  a  positive  and  pub- 
lic denumstration  against  them.  The  mer- 
chants are  at  the  mercy  of  informers  and  de- 
tectives, and  the  laws  are  so  intricate  and  capa- 
ble of  such  construction,  that  the  most  inno- 
cent and  most  honorable  men  may  become  the 
victims  of  private  or  public  and  legal  extortion. 
The  timid  may  submit  to  be  blackmailed ; 
those  of  more  firmness  may  consent  to  official 
compromises,  which,  however,  are  sure  to  be  of 
such  a  character  as  to  be  what  is  officially  cal- 
led "a  good  thing"  for  the  cla.ss  of  revenue 
officers  for  whose  enrichment  the  law  seems 
designed. 

We  know  of  no  subject  which  just  now 
better  demands  the  attention  of  the  Chamber 
of  Commerce.  What  the  merchants  cannot 
and  dare  not  do  individually  they  may  do  as  a 
body.  We  doubt  if  Cooper  Institute  would  be 
large  enough  to  hold  a  meeting  called  to  con- 
sider a  revision  of  the  laws  relating  to  the 
tariff",  and  such  a  meeting  would  show  a  public 
feeling  on  this  subject  and  bring  out  a  mass  of 
evidence  which  would  be  the  first  step  and  a 
long  one  toward  reform.  One  of  the  most 
eminent  lawyera  of  this  city,  and  a  hearty  sup- 
porter of  the  Kepublican  party,  hius  said  that 
no  ministry  in  England  would  remain  in  office 
a  week  that  undertook  to  withstand  a  pai Tia- 
mentary  inquiry  in  such  a  case  as  this  of  Phelps, 
Dodge  &  Company.  We  cannot  turn  out  a 
ministry,  but  public  opinion  among  us  can 
compel  the  dominant  party  in  an  administra 
tion  to  correct  oppressive  and  obnoxious  laws. 


A  COMPLETE  ANALYSIS  OF  THE  CASE. 


[From  The  Nation,  N.  Y.,  J/ay  1, 1S73.] 

THE  EXTRAORDINARY  ELEMENT  IN 

THE  CASE  OF  PHELPS,  DODGE  &  CO. 

The  case  of  Phelps,  Dodge  &  Co.  is  cer- 
tainly destined  to  become  a  cause  celebre  in 
our  mercantile  history  ;  and,  if  we  are  not 
much  mistaken,  will,  by  awakening  public  at- 
tention to  the  character  of  the  laws  and  the 
fiscal  policy  under  which  the  business  of  the 
country  is  transacted,  exert  an  important  influ- 
ence also  upon  our  political  future.  The  state- 
ment of  their  difficulties  with  the  Government, 


which   the   firm  has  recently  published,  is  a 

document  so  remarkable,  that  were  it  not  for 

the  accompanying  confirmatory  letters  of  the 

late  United   States   District    Attorney,   Hon. 

Noah  Davis,  and  the  Special  Treasury  Agent, 

I  Mr.  Jayne,  the  alleged  facts  would  seem  al- 

j  most  incredible;  and  yet  the  concurrent  cir- 

!  cumstances  of  the  case  which  have  not  been 

j  publicly  related,  and  the  deductions  which  a 

review  of  the  whole  affair   legitimately  war- 

I  rants  are,  if  anything,  still  more  extraordinary. 

I      During   the  past   summer   a   contract  was 

I  being   negotiated    by   the   house   of    Phelps, 

I  Dod";e  &  Co.  with  certain  manufacturers   in 


22 


THE  CASE  OE  rilELPS,  DODGE  &  CO. 


Europe  for  the  purchase  of  the  entire  annual 
product  of  a  sjiecialty  of  metal  fabrication  ; 
and  as  the  project,  from  tlic  amount  of  capital 
involved,  was  one  of  no  little  risk  and  of  great 
importance,  the  entire  discussion  and  corre- 
spondence relative  to  it  were  made  in  the 
highest  degree  confidential,  and  a  member  of 
the  firm  ultimately  sent  abroad  to  perfect  and 
complete  the  arrangements.  But  the  steamer 
which  bore  him  had  hardly  taken  its  departure 
when  the  firm  was  waited  upon  by  a  competi- 
tor in  business,  who,  after  making  known  his 
acquaintance  with  the  proposed  contract  and 
its  conditions,  as  well  as  the  sailing  of  the 
partner  referred  to,  jn-cferred  a  demand  for 
participation  for  himself  and  others  in  the 
enterprise,  accompanying  it  at  the  same  time 
with  a  threat  that  unless  the  terms  were  ac- 
cepted "  he  would  burst  the  whole  business." 
It  is  only  necessary  to  say  that  the  demand  was 
at  once  resented,  and  its  author  treated  as  he 
deserved.  But  the  revelation  that  what  were 
supposed  to  be  business  secrets  in  the  firm 
had  become  known,  and  the  further  fact  that 
an  attempt  was  subsequently  made  in  Europe  to 
make  good  the  threat  uttered,  led  to  an  investi- 
gation, when  it  was  ascertained  that  for  some 
time  previous  it  had  been  the  practice  of 
several  reputed  respectable  New  York  metal- 
brokers  and  merchants  to  visit  the  store  of 
Ph(!ll)s,  Dodge  &  Co.,  secretly  and  at  night, 
for  the  purpose  of  inspecting  their  letter-books 
and  invoices — admission  being  given  them  by 
dishonest  clerks  and  watchmen,  who  had  been 
bribed  to  betray  their  employers'  interests. 

An  arrest  and  prosecution  of  at  least  one  of 
the  principals  concerned  in  this  disgraceful 
transaction  immediately  followed;  but  as  it 
was  shown  that  admission  to  the  store  was 
allowed  by  the  agents  of  the  firm,  and  as  it 
could  not  be  proved  that  any  article  had  been 
feloniously  removed  from  the  premises,  no 
specific  criminal  oflFence,  for  which  punishment 
might  ))e  awarded,  could  be  established.  But 
in  the  course  of  tlie  trial  it  came  to  light  that 
among  the  employees  who  had  been  guilty, 
from  mercenary  motives,  of  betraying  the 
trust  confided  to  them,  was  a  clerk  who,  to  the 
sin  of  dishonesty,  added  the  deeper  one  of  in- 
gratitude. This  man,  a  creole  Frenchman  or 
Spaniard,  of  supposed  WestI  ndia  origin,  had 
been  given  employment  in  the  outset,  when 
not  needed,  by  a  member  of  the  firm,  simply 
out  of  compassion  for  his  utter  poverty  and 
friendlessness ;  and  had  subsequently  been 
educated,  promoted  on  a  liberal  salary  to  the 
position  of  assistant  invoice  clerk,  and  even 
retained  in  position  when  ill-health  had  almost 
entirely  incapacitated  him  for  any  useful  and 
efficient  service.  Tliis  rascal,  for  such  is  the 
only  proper  term  that  can  be  applied  to  him — 


who,  by  the  way,'  it  shoidd  be  stated,  had 
gained  admission  to  the  store  at  night  under 
the  plea  of  serving  his  employers  by  bringing 
up  his  arrears  of  copying — foreseeing  as  the 
result  of  the  legal  investigation  that  his  own 
dismissal  from  employment  would  be  one  cer- 
tain issue,  took  immediate  steps  to  secure  him- 
self against  any  contingent  detriment  by  as- 
suming the  role  of  an  informer;  and  having, 
in  his  capacity  as  assistant  clerk,  become 
accpiainted  with  certain  invoice  irregularities, 
in  place,  as  was  his  duty,  of  informing  his  em- 
ployers, he  stole  the  documents  in  question, 
and  put  himself  in  commimication  with  the 
Custom  House  officials. 

As  to  the  manner  in  which  he  operated  to 
make  his  stolen  capital  available,  it  is  sufficient 
to  say  that  men  of  high  standing  in  the  legal 
profession  were  only  too  ready  to  engage,  for 
a  share  in  the  spoils,  in  the  work  of  hunting 
down  an  old  and  leading  firm  of  New  York 
merchants,  and  by  such  the  case  was  worked 
up  and  placed  in  the  hands  of  the  Custom 
House  detectives. 

Now,  whether  the  firm  of  Phelps,  Dodge  & 
Co.  were  or  were  not  engaged  in  an  attempt  to 
defraud  the  revenue,  is  a  question  which  we  do 
not  here  propose  to  discuss.  But  we  simply 
draw  a  picture  of  the  events  that  preceded 
their  accusation  and  arraignment,  anci  ask  our 
readers  and  the  public  to  take  a  good  look  at 
it,  and  then  ask  themselves  how  long  a  com- 
munity which  tolerates  such  a  dry-rot  of  all 
manliness  can  legitimately  profess  to  be  moral 
or  even  civilized  ?  Or,  in  the  face  of  such 
precedents,  what  probability  is  there  of  New 
York  City  speedily  becoming  the  commercial 
centre  of  the  world's  exchanges,  the  contimied 
recipient  of  foreign  capital,  or  an  entrei)ot 
of  the  commerce  of  all  nations  ? 

But  if  the  relation  of  private  parties  to  this 
case  has  been  most  extraordinary,  the  position 
of  the  Government,  both  in  respect  to  the 
law  and  its  administration,  in  this  same  mat- 
ter, has  been  no  less  singular.  And  in  saying 
this  we  by  no  means  intend  to  reflect  on  the 
course  of  the  minor  officers  of  the  revenue, 
who  play  the  part  of  prosecutors  and  detectives. 
The  law  under  which  they  act  is  permissive, 
if  not  mandatory ;  and  when  the  end  in  view 
is  pecuniary  gain,  human  nature  is  pretty  cer- 
tain to  run  in  similar  channels,  whether  it  be 
enthroned  in  the  Custom  House,  presides  over 
a  Chatham  street  "loan  office,"  or  rides  on  a 
red  cart  in  the  person  of  a  Yankee  tin-jieddler. 
But  when  we  come  to  deal  with  Washington 
and  the  higher  officials  who  preside  over  the 
destinies  of  tlie  nation,  we  have  a  right  to  ex- 
pect something  better.  We  have  a  right  to 
expect  that  they,  at  least,  shall  fully  recognize 
the  principle  that  the  primary  object  of  all  gov- 


COMMENTS  OF  THE  PRESS. 


23 


eminent  is  to  remove  obgtructions;  and  of  a  free 
j^overnnient,  to  promote  the  interests  of  the 
people  and  prevent  wronj;  and  injustiec.  But 
axiomatic  as  are  these  principles,  they  are  the 
very  ones  which  appear  to  have  obtained  the 
least  recognition  in  the  determination  and  ad- 
ministration of  our  recent  revenue  policy ;  and 
in  the  place  of  them  we  have  had  interference 
and  obstruction  as  the  characteristic  feature  of 
Congressional  legislation ;  and  in  the  Depart- 
ments, a  proclamation  by  works  that  Govern- 
ment exists  primarily  for  itself,  and  that  its 
Interests  jxr  se  are  first,  and  those  of  the  in- 
<lu8try,  trade,  and  conmierce  of  the  country, 
secondary  and  subordinate,  or,  as  the  late 
Secretary  of  the  Treasury  substantially  ex- 
pressed it,  in  an  official  conversation  during 
the  past  winter,  "  that  he  regarded  the  inter- 
ests of  the  (iovcrnment  and  the  interests  of 
the  merchants  as  diametrically  opposite." 

In  the  light  of  such  precedents  and  senti- 
ments, and  as  bearing  upon  the  industry,  com- 
merce, and  morality  of  the  country,  it  is  inter- 
esting next  to  trace  the  influence  and  action 
of  the  Government  in  the  Phelps,  Dodge  k  Co. 
diUiculty,  from  its  remote  inception  to  its  full 
fruititm  and  culminati(m.  In  the  first  place, 
the  attempt  to  collect  a  revenue  from  duties 
on  tin  and  tin  plate  (the  articles  in  respect  to 
which  undervaluation  is  allegetl)  is  something 
economically  indefensible.  Neither  of  these 
commodities  is  produced  in  the  United  States, 
and  no  infant  manufacture,  or  citizen  in  such 
a  state  of  pauperism  as  warrant'^  him  in  asking 
the  Government  to  impose  a  tax  for  his  bene- 
fit, seeks  or  demands  it.  But,  at  the  same 
time,  tin  and  tin  plates  are  so  indispensable  in 
our  social  economy,  and  enter  into  so  many 
forms  of  domestic  industry,  that  it  is  not  too 
much  to  say  that,  for  every  dollar  tax  by  which 
their  cost  is  primarily  enhanced  by  the  Gov- 
ernment, the  consumer  pays,  in  the  way  of 
profits,  interest,  and  conunission  on  the  suc- 
cessive sales  and  transformations  that  precede 
their  final  use,  at  least  from  fifty  to  seventy- 
five  cents  additional. 

The  tax,  then,  in  place  of  being  specific,  or 
by  the  pound,  as  it  might  be — thus  obviating 
any  possibility  of  fraud  on  the  part  of  the  im- 
porter— is  made  ad  valorem  ;  and  when  Com- 
missioner Wells,  some  years  since,  with  the 
general  concurrence  of  importers  and  apprais- 
ers, and  with  a  view  of  simplifying  the  law 
and  its  administration,  made  a  special  recom- 
mendation to  Congress  in  favor  of  converting 
the  existing  ml  valorem  on  tin  plates  into  an 
equivalent  sj)ecijic,  the  recommendation  re- 
ceived no  more  attention  than  if  he  had  pro- 
posed some  standard  by  which  the  length  of 
dogs'  tails  should  be  equalized  and  adjusted. 
And   the   reason,    furthermore,    why    specific 


duties,  as  a  preventive  agiunst  undervaluations, 
have  not  been  more  generally  substituted  in 
the  frequent  readjustments  of  our  taritt'  laws, 
is  undoubtedly  to  be  found  in  the  circumstance 
that  the  essence  of  protection  is  obstruction, 
and  every  protectionist,  when  called  upon  to 
legislate,  instinctively  feels,  even  if  he  cannot 
give  a  reason,  that  the  removal  of  any  obstruc- 
tion in  the  way  of  importation.ss  is  in  itself  a 
movement  in  tlie  direction  of  greater  freedom 
in  exchanges ;  and  that,  in  comparison  with 
such  a  result,  temptations,  snares,  frauds,  and 
national  demoralization  are  evils  of  minor  con- 
sideration. 

But  although  the  substitution  of  specific  for 
ad  valorem  duties  would  efTectually  prevent 
frauds  in  importation,  except  through  the  direct 
complicity  of  the  agents  whom  the  Government 
appoints  to  enumei-ate,  weigh,  and  measure,  it 
would  still  seem  as  if  the  law  in  other  respects 
had  been  purposely  disreganled  to  make  the 
business  of  importing  as  difficult  and  person- 
ally hazardous  as  possible.  Thus,  for  example, 
instead  of  one  concise  code,  we  have  stjitute 
running  back  to  1799  piled  upon  statute,  until 
the  law  has  become  so  complicated  that  it  is 
within  bounds  to  say  that  there  are  not  ten  men 
to-day,  in  all  the  United  States,  who  have  any 
clear  comprehension  of  all  its  recpiirements, 
provisions,  limitations,  and  interpretations. 
Again,  the  law  re(iuires  invoices,  oaths,  certifi- 
cates, and  declarations,  not  once,  but  in  tripli- 
cate, of  shippers,  consuls,  owners,  and  con- 
signees, in  respect  to  the  most  minute  particu- 
lars of  cost,  market  value,  freights,  charges  and 
conunissions ;  and  yet,  in  actual  practice,  and 
when  it  is  to  the  advantage  of  the  Government 
to  do  so,  all  these  forms  may  be  set  aside,  and 
the  duties  assessed  on  the  judgment  of  certain 
persons,  supposed  to  be  competent,  sitting  as 
appraisers.  And  when  these  appraisers,  who.se 
functions  and  office  would  seem  to  be  judicial, 
have  once  given  their  judgment,  and  the  same 
has  been  accepted  alike  by  the  Government  and 
the  merchant,  the  duties  paid,  and  the  merchan- 
dise delivered,  sold,  and  consumed,  it  is  held 
to  be  right,  as  it  is  the  practice  of  the  Govern- 
ment, to  go  back  at  any  time  within  a  period 
of  five  years  and  reopen  the  whole  matter  for 
further  adjudication;  and,  as  in  the  case  of 
Phelps,  Dodge  &  Co.,  exact  fines,  amounting 
to  confiscation,  for  technical  infractions  of  the 
law,  which,  by  the  admission  of  the  (iovcrn- 
ment agents  themselves,  have  resulted  in 
practically  no  loss  to  the  revenue.  And  as 
illustrating  still  further  the  arbitrary  character 
of  the  law  regulating  foreign  commerce,  it 
may  be  stated,  that  even  in  cases  where  the 
duty  is  so  much  per  pound,  per  yard,  or  per 
dozen,  and  where  value  is  of  no  conscfjuence, 
if  it  so  hapjxMis  that  the  invoice  does  not  cor^- 


2i 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


rectly  state  the  value,  the  goods  are  liable  to 
confiscation,  and  in  at  least  one  instance  during 
the  past  year,  of  tliis  exact  character,  have,  in 
fact,  been  seized  lor  forfeiture,  and  the  con- 
signee threatened  with  imprisonment.  And  in 
the  case  of  goods  imported,  where  the  duty  is 
ad  valorem,  but  the  value  indefinite  or  difficult 
of  determination,  and  when  for  such  very 
reasons — as  in  a  recent  importation  of  South 
African  diamonds — the  goods  are  forwarded  to 
the  care  of  the  Collector  for  appraisement, 
and  not  to  the  owner  or  consignee,  the  absence 
of  an  invoice,  giving  details  which  cannot  be 
known  to  any  one,  has  not  only  been  held  to 
render  the  importation  liable  to  forfeiture,  but 
on  such  flimsy  basis  proceedings  for  forfeiture 
have  actually  been  instituted. 

But  the  law,  harsh,  arbitrary,  and  barbarous 
as  it  is,  is  not  wholly  unmerciful,  inasmuch  as 
it  allows  the  head  of  the  Treasury  Department 
"  to  mitigate  or  remit  any  penalty  or  forfeiture," 
when  the  same,  "  in  his  opinion,  shall  have 
been  incurred  without  any  intention  of  fraud." 
Now,  in  the  case  of  Phelps,  Dodge  &  Co.,  an 
infraction  of  the  Law  was,  without  reserve,  ad- 
mitted, and,  as  Mr.  Boutwell  has  stated,  the 
practice  of  the  Treasury  undoubtedly  warranted 
the  Secretary  in  assuming  an  admission  of 
illegal  action,  and  an  offer  to  settle,  as  equiva- 
lent to  a  confession  of  any  thing  which  the  form 
of  procedure  might  stipulate ;  but  the  fact, 
nevertheless,  remains,  that  we  have  the  assertion 
of  the  firm  and  the  certificate  of  the  District 
Attorney,  Jirst,  that  the  offence  was  not  in- 
tentional, and,  second,  that  the  total  loss  to  the 
revenue  during  an  extended  period,  and  as  the 
result  of  Custom  House  transactions  and  pay- 
ments representing  millions,  was  a  sum  com- 
paratively insignificant.  Under  such  circum- 
stances it  would  seem  to  have  been  the  part  of 
our  great  Government,  whose  revenue  laws  are 
acknowledged  to  be  a  bundle  of  inconsistencies, 
to  have  fallen  back  on  the  old  maxim,  "De 
minimis  non  curat  lex ;"  and  even  on  the  .as- 
sumption that  the  utmost  that  could  be  charged 
was  true,  to  have  dealt  tenderly  with  the 
reputation  of  one  of  the  representative  and 
most  enterprising  commercial  firms  of  the 
country,  the  members  of  which,  when  it  was  a 
question  whether  the  Government  itself  would 
have  a  continuance,  had  contributed  of  their 
own  number  to  the  ranks  of  the  army,  and  had 
given  of  their  substance  to  the  cause  of  the 
country  what  in  old  time  would  have  sufficed 
for  a  "king's  ransom" 

Hut  what  did  our  great  model  and  enlight- 
ened Government,  acting  through  its  official 
representatives,  actually  do  ?  It  exacted  a 
penalty  of  $271,023.17  for  a  detriment  to  the 
revenue  which  it  has  been  certified  was  not  in 
excess  of  |l,r>G4,  and  which  the  Treasury,  by 


compromising,  acknowledged  to  have  been  un- 
accompanied l)y  fraudulent  intent ;  and  exacted 
it  furtliermore  with  the  full  knowledge  that  the 
diversion  of  one-fourth  of  the  whole  amount 
paid  into  the  pockets  of  a  scoundrel  of  a  clerk, 
who  for  lucre  had  sold  out  his  employers, 
would  in  itself  constitute  such  a  premium  and 
incentive  to  rascality  as  to  substitute  an  atmos- 
phere of  suspicion  and  concealment,  in  place  of 
confidence  and  good  feeling,  throughout  the 
entire  mercantile  community.  There  is  no 
necessity,  in  forming  an  opinion  about  this 
part  of  Phelps,  Dodge  &  Co.'s  case,  to  consult 
Brightley's  Digest,  or  to  trouble  our  heads 
about  actual  costs,  market  values,  or  what  has 
or  has  not  been  the  practice  of  the  Treasury. 
If  the  facts  in  respect  to  the  inception  of  the 
difficulty,  the  procurement  of  evidence,  the 
absence  of  intent,  the  amount  of  loss  to  the 
revenue,  the  penalty  exacted,  and  the  dis- 
position of  the  penalty,  are  as  represented — 
and  it  is  difficult  to  see  how  the  above  state- 
ments can  be  questioned — the  action  of  the 
Government  has  been  simply  infamous,  and  in 
almost  any  other  constitutional  country  would 
have  not  only  driven  the  ministry  from  power, 
but  would  have  compelled  national  atonement 
not  only  for  the  money  paid  but  for  damages 
incurred  to  the  uttermost  farthing.  Legislation, 
we  all  know,  has  driven  our  commerce  from 
the  seas;  but  administration  seems  now  to 
supplement  legislation  by  driving  American 
merchants  out  of  existence,  and  substituting 
in  their  place  men  of  no  nationality,  who  will 
say  to  the  Government  as  their  prototype  Shy- 
lock  said  to  his  persecutors :  "  The  villainy  you 
teach  me  I  will  execute,  and  it  shall  go  hard 
but  I  will  better  the  instruction." 


A  PRACTICAL  CONFISCATION. 


[From  The  N.  Y.  Evening  Express,  April  16, 1873.] 

We  publish  the  very  elaborate  statement  of 
Phelps,  Dodge  &  Co.,  in  another  column,  with 
the  important  letters  appended  of  B.  G.  Jayne, 
the  United  States  Special  Treasury  Agent,  the 
vindication  of  the  late  .and  long  United  States 
Consul,  Thomas  H.  Dudley,  as  to  the  practices 
of  the  firm  in  London,  and  of  United  States 
Judge  Noah  Davis,  esich  of  whom  vindicate  the 
New  York  firm  of  anything  like  intentional 
fraud.  Messrs.  Phelps,  Dodge  &  Co.  give  their 
own  concise  reasons  relative  to  the  revenue 
dispute,  and  show  why  they  consented,  in  the 
sum  of  $271,000,  to  get  rid  of  a  claim  which 
in  equity  amounted  to  but  a  few  hundred.  On 
the  subject  of  invoices  they  have  shown  that 
owing  to  certain  irregidarities  abroad,  of  which 


COMMENTS  OF  THE  PRESS. 


25 


they  had  no  knowledge,  the  Government  had 
received  far  more  in  excess  or  overcharge  of 
duties  than  it  had  h)st  from  any  advantages  to 
the  firm.  Indeed,  the  act  of  the  Government 
proved  to  be  a  practical  confiscation,  and  many 
friends  of  the  firm,  and  some  not  friendly, 
blame  the  parties  for  not  vindicating  their  case 
in  court,  rather  than  submit  to  the  extortion  of 
the  Government;  but  the  reasons  given  for 
this  course  are,  first,  the  proposal  of  the  firm 
to  submit  their  case  to  the  decision  of  the 
(Government,  and  secondly,  the  uniform  desire 
and  practice  of  the  firm  to  avoid  litigation. 
This  case  is  not  peculiar,  as  it  shows  wherein 
the  letter  of  the  law  may  become  positive  in- 
justice to  persons  accused,  but  all  these  points 
are  stated  with  so  nuich  clearness  and  frank- 
ness that  we  leave  them  to  the  reader,  and  in 
the  full  conviction,  after  perusal,  both  that  no 
fraud  was  intended,  and,  secondly,  that  the 
exactions  of  the  Government,  for  exposures, 
first  inspired  by  informers  and  United  States 
agents,  wei-e  altogether  beyond  the  offence 
committed.  The  good  intentions  and  fair  mer- 
cantile credit  of  a  long  life  ought  to  outweigh 
the  criticisms  and  injustice  caused  by  a  failure 
of  agents  to  do  their  duty.  Where  the  firm  of 
Phelps,  Dodge  &  Co.  in  a  i)eriod  of  five  years 
paid  to  the  Government  many  millions  in  cus- 
toms, the  loss  to  the  Government  from  the 
iri-egulai-ity  of  their  agents  was  less  than 
$3,0«JO,  and  this  from  those  who  gave  yearly 
many  times  this  sum  in  charity. 


HOW  IT  IS  DONE. 


[From  liiK  N.  Y.  Evknino  Express,  April  16, 1878.] 
The  affidavit  of  "information  and  belief," 
without  the  slightest  hint  or  statement  of  the 
grounds  or  facts  upon  which  that  "  information 
and  belief"  is  founded— upon  which,  if  perjury 
could  be  conclusively  proved,  an  indictment 
would  lie — of  the  lowest  and  most  worthless 
culprit  unhung  or  out  of  jail,  without  character 
or  faith  on  which  an  oath  is  founded,  who  will 
sell  himself  for  a  pittance,  upon  such  complex 
questions,  about  which  the  most  intelligent 
experts  of  the  day  may  honestly  dift'er  in 
opinion  of  valuation  of  from  five  to  ten  per 
cent.,  will  outweigh  in  the  opinion  of  the  Attor- 
ney of  tlie  Government,  who  gets  two  percent, 
on  all  confiscations;  in  the  opinion  of  the  Col- 
lector, Naval  Officer  and  Surveyor,  who  get 
one-quarter,  (while  one-fourth  goes  to  induce 
informers  to  disregard  truth,  without  thought 
of  consequence)  a  life-time  of  honesty,  char- 
acter unspotted,  a  world-wide  reputation  for 
honor  and  integrity,  a  financial  responsibility 
of  almost  inestimable  value,  both  in  America 


and  Europe,  a  Christian  character  to  lose,  a 
cherished  family  name  to  protect,  an  honoraible 
citizenship  and  influence  to  be  obtained  and 
retained  only  by  a  life-time  of  honest  and  hon- 
orable dealings.  *  *       » 

If  the  merchant  feels  it  to  be  his  duty  to  de- 
fend himself,  it  is  at  a  great  expense  and  upon 
an  extremely  doubtful  financial  result.  It  is 
delayed  until  the  delay  is  equivalent  to  a  de- 
nial of  justice. 

If,  by  rejison  of  some  technical  misunder- 
standing of  the  value  of  the  goods,  an  under- 
valuation is  made  out  —  however  slight, 
though  an  eighth  of  one  yter  cent. — technically 
the  merchant  may  be  charged  by  the  court  as 
guilty,  and  mulcted  in  heavy  damages  for 
costs,  besides  a  confiscation  of  all  the  goods, 
though  of  the  value  of  millions.  If  the  "job" 
is  made  out  of  "  whole  cloth  "  by  peijury,  yet 
if  the  court  certifies  to  probable  cause,  the  im- 
porter is  without  redress  for  damages  sus- 
tained ;  and  therefore,  whichever  way  the  case 
ends,  the  merchant  must  suffer  irreparable  loss 
in  his  own  good  name  both  in  America  and 
Europe.  Rival  houses  will  easily  circulate  the 
prejuiliced  report,  newspapers  will  spread  it 
i)roadca.'^t,  and  the  only  remedy  seems  to  be  to 
"  deliver  up  "  what  is  asked,  regardless  of  law, 
justice,  or  decency. 

If  the  Government  officials  did  not,  with 
their  informer,  share  in  the  ill-gotten  gains, 
doubtless  a  "probable  case"  would  be  reipiired 
to  bo  made  out,  before  the  Collector  would 
allow  the  honorable  name  of  responsible  im- 
porting houses  to  be  bhisted  by  a  publication 
of  slanderous  statements  of  alleged  guilt  of 
fraud  upon  the  revenue  of  the  Government. 
As  it  is,  the  more  unspotted  the  credit  of  the 
importing  house,  the  greater  the  facility  to 
blacken  them  through  "  an  infornier,"  know- 
ing full  well  that  such  a  house  will  have  a  life- 
time reputation  to  lose,  a  world-wide  financial 
credit  at  stake,  an  honorable  family  to  defend. 

Is  it  not  time  the  finger  of  scorn  wjus  point- 
ed to  all  those  who  indirectly  aid  and  abet  the 
oppressive  breaking  down  of  a  well-known 
mercantile  reputation  and  financial  credit  so 
often  assailed  at  the  instance  of  officials  for 
gain,  and  tliat  the  power  of  the  press  of  the 
nation  was  also  brought  to  bear  to  break  down 
this  oppression  upon  honorable  merchants 
under  the  false  name  of  law  ? 


[From  the  aams  Newspaper.'] 

While  we  have  no  sympathy  for  Phelps, 
Dodge  &  Co.,  and  shall  not  soon  forget  that 
one  of  our  editors  was  put  out  of  Congress 
by  the  senior  of  the  firm,  in  as  partisan  and 


26 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


unjust  a  decision  as  ever  was  raade  by  party 
men  in  party  times,  we  nevertheless  like  to  see 
fair  play  and  plain  justice.  But  for  the  pri- 
vate i)lunder  in  this  case,  we  believe  that,  under 
tlie  old  law  of  Congress  and  the  equities  of  the 
case,  Phelps,  Dodge  &  Co,  would  have  escaped 
by  paying  $2,500  in  deficient  duties.  Every 
merchant  is  liable  to  this  injustice,  and  may 
therefore  fairly  protest  against  it. 


AMPLE  EXONERATION. 


[From  The  New  York  Commercial  "Advertiser, 
April  16, 18T3.] 

PHELPS,  DODGE  &  CO. 

A  long  explanation  by  this  firm  is  published 
on  our  first  page.  They  take  pains  to  show 
how  the  errors  charged  against  them  were  pos- 
sible, and  claim  that  they  resulted  from  inad- 
vertence, and  from  the  intricacies  of  the  reve- 
nue laws.  Errors  have  crept  into  invoices  re- 
ceived from  many  different  makers,  and  disa- 
greements between  the  Liverpool  house  and  the 
makers  in  respect  to  the  qualities  or  prices  to 
be  paid  for  particular  goods  have  been  uur 
avoidable.  The  firm  show  that  the  actual  loss 
to  the  Government  on  transactions  running 
over  many  years,  and  involving  many  millions 
of  dollars,  was  not  more  than  two  or  three 
thousand  dollars.  Ex-District  Attorney  Davis 
and  Special  Agent  Jayne,  who  conducted  the 
examination  and  prosecution,  certify  to  this 
fact,  and  Judge  Davis  remarks  that  Phelps, 
Dodge  &  Co.  manifested  a  prompt  and  earnest 
desire  to  court  and  aid  investigation,  to  correct 
any  error,  and  right  every  wrong  that  might 
appear  to  have  been  done  to  the  Government 
or  its  revenues.  The  document  in  question 
explains  the  reason  for  paying  the  Government 
the  demand  the  laws  allowed  to  be  made.  It 
furnishes  an  ample  exoneration  of  this  long 
established  house,  whose  integrity  is  and  has 
been  unquestioned.  The  possibility  of  wrong 
and  injustice  under  our  revenue  laws  is  also 
shown — by  no  means  a  new  fact.  Its  exposi- 
tion now,  however,  may  perhaps  serve  to  call 
attention  to  a  system  under  which  such  things 
are  possible,  and  suggest  a  remedy  or  a  pre- 
ventive. 


UNSPOTTED  BY  THE  ATTACK. 


[From  The  New  York  Oraimiic,  April  Ifi,  1873.] 

A  long  statement  has  been  published  by 
Phelps,  Dodge  &  Co.,  which  fully  clears  that 
old  and  honored  house  from  all  suspicion  of 


attempting  to  defraud  the  revenue.  During 
the  last  five  years  the  firm  have  imported  over 
$40,000,000  worth  of  metal,  on  which  they 
paid  duties  to  the  amount  of  |8,000,000.  The 
total  of  irregularities  charged  against  them 
during  this  time  was  only  $2,000,  yet,  under 
the  construction  of  the  law  made  by  our 
revenue  officers,  they  were  subject  to  a  fine  of 
one  million  dollars.  Sooner  than  have  their 
books  seized  and  held  by  Government,  and 
their  business  broken  up,  Phelps,  Dodge  & 
Co.  compromised  on  $2 Y  1,000.  Then  they 
waited  for  time  to  do  them  justice,  and  pre- 
pared the  exonerating  statement  which  they 
now  publish,  and  which  is  so  strong  as  to  call 
forth  the  opinion  from  Judge  Noah  Davis  that 
it  is  a  proof  of  their  "  entire  innocence,,  in  the 
whole  business,  of  any  attempts  at  fraud." 
The  fine  has  been  paid.  Part  of  it  has  been 
handed  to  the  informer,  an  ingrate  clerk  in  the 
employ  of  the  firm  ;  a  moiety  has  gone  into 
the  pockets  of  the  Collector,  Surveyor,  and 
Naval  Officer  of  the  Port,  and  the  Govern- 
ment has  received  only  a  portion  of  it.  Un- 
fortunately our  revenue  laws  are  so  crude  and 
old-fashioned  that  the  Government  was  readily 
made  a  party  to  a  prosecution  that  from  first 
to  last  was  a  blackmailing  operation.  But  this 
is  not  the  only  lesson  the  affiiir  impressses. 
It  reflects  no  credit  on  American  journalism  to 
find  editors  and  newspapers  howling  down  a 
house  that  has  been  an  honor  to  the  city  for 
seventy  years,  on  the  strength  of  a  spy's  oath 
and  the  stories  of  revenue  officials  eager  for  a 
division  of  the  spoils.  Just  men  will  always 
wait  to  hear  the  other  side.  They  find  their 
reward,  as  in  this  case,  in  the  more  patient  in- 
vestigation which  leaves  an  old  commercial 
house  unspotted  by  the  attack  of  the  black- 
mailer. 


[From  TuE  N.  Y.  Evening  Mail,  April  17,  1873.] 

A   WELCOME  VINDICATION. 

It  is  with  peculiar  justice  that  the  distin- 
guished firm,  of  whose  explanation  of  the 
question  in  dispute  between  themselves  and 
the  revenue  authorities  we  gave  a  summary 
yesterday,  complain  of  the  treatment  they 
have  received  from  the  public  in  this  matter. 
The  house  of  Phelps,  Dodge  &  Co.,  by  its  long 
and  honorable  record  and  its  high  standing 
among  the  business  community,  not  less  than 
by  the  eminence  of  the  individual  members  in 
"  doing  good  among  men,"  was  entitled  to  the 
fullest  confidence  from  the  public  at  large.  If 
there  was  to  be  any  pre-judgment  of  a  dis- 
puted matter,  fair  play  demanded  that  the 
leaning  should  be  in  favor  of  so  honorable  a 
house.     But  coming  as  it  did  when  the  public 


COMMENTS  OF  THE  PRESS. 


27 


mind,  stirred  by  the  Credit  Mobilier  disclosures, 
was  disposed  to  believe  the  worst  of  the  best, 
the  charge  of  Custom  House  irregularities  was 
magnified  at  once — those  who  are  always  alert 
to  catch  and  loud-mouthed  to  proclaim  any 
imputation  cast  upon  "  Christian "  business 
men,  lending  eager  and  efficient  aid—  into  an 
absolute  charge  of  little  less  than  wholesale 
smuggling.  The  vindication  which  the  firm 
make  is  thorough  and  satisfactory,  and  should 
put  these  careless  slander  mongers  to  the 
blush.  We  rejoice  in  it  the  more  because  it 
puts  to  confusion  the  dangerous  sneer  that 
honesty,  that  surest  foundation  of  commerical 
as  of  individual  or  national  success,  is  no  long- 
er to  be  found  in  our  business  circles.  New 
York  can  point  proudly  to  hundreds  of  shining 
examples  to  prove  the  contrary,  and  with  the 
more  confidence  now  that  the  innocence  of 
Phelps,  Dodge  &  Co.  is  so  fully  proven. 
*  «  «  *         «  «         • 

We  confess  that  we  were  at  first  thought 
inclined  to  blame  the  house  for  the  seeming 
weakness  of  compromising  with  the  govern- 
ment. But  they  have  now  cleared  up  this 
matter  as  well,  and  we  are  glad  to  congratulate 
the  house  and  the  commercial  conununity  in 
general  upon  their  complete  vindication.  It 
would  have  been  a  bK)w  to  all  New  York  com- 
merce had  the  iniputations  upon  one  of  its 
most  honored  leaders  been  sustained  ;  it  is  an 
honor  to  it  that  they  have  been  so  thoroughly 
dispelled. 


[From  TiiK  Bbooklyn  Eaolk,  April  16, 1S78.] 

Whatever  may  be  the  technical  interpreta- 
tion of  the  revenue  law  it  is  entirely  obvious 
from  the  experience  of  Phelps,  Dodge  &  Co., 
that  the  Government  has  coolly  perpetrated  a 
robbery  of  the  firm,  if  the  matter  was  to  be 
tried  on  its  merits  in  equity.  It  is  utterly  ab- 
surd to  suppose  that  a  large  house,  whose  busi- 
ness annually  covers  millions  of  dollars,  would 
stoop  to  sucli  paltry  dealing  as  to  pick  up  a 
five  dollar  note  from  a  ^1,400  transaction,  and 
other  similar  business  exploits.  If  this  firm, 
the  very  friction  of  whose  business  yields  an  al- 
most constant  rivulet  of  uncounted  cash  to  the 
revenue  bureau,  may  be  snapped  up  by  some 
spy  who  watches  eagerly  for  some  obstruction 
that  will  make  it  appear  that  the  surplus 
given  away  is  for  a  moment  receding  toward 
the  firm,  what  security  is  there  for  other  busi- 
ness houses?  The  Government's  system  of 
enormous  "  divides  "  and  fees  to  informers  and 
their  assistants  and  ita  remorseless  interpreta- 
tion of  law  as  against  the  simplest  forms  of 
justice  is  a  national  shame.  It  is  an  open  bid 
for  blackmailing,  dishonesty  and  rascality  of 
every  degree. 


[From  the  same  Newspaper.] 

It  was  a  case  of  circumstantial  evidence 
against  them.  Certain  memoranda — used  for 
private  and  entirely  honorable  purposes,  but  at 
the  same  time  technically  exhibiting  a  petty 
violation  of  the  strict  letter  of  the  revenue 
law,  oftener  showing  a  driblet  of  irregularity  in 
favor  of  the  Government  than  otherwise — 
were  cunningly  brought  to  bear  against  them  by 
a  clerk  they  had  well  trained  in  business  and 
with  a  malice  that  was  sleepless.  He  sought 
to  destroy  at  one  blow  their  reputation  for 
commercial  integrity  and  enrich  himself  with 
the  fruits  of  their  intended  dishonor.  He  has 
miserably  failed  in  the  one,  and  in  the  other 
has  earned  an  infamy  from  which  he  cannot 
recover. 


[From  the  same,  April  28, 1878.] 

REVENUE   SHAVING. 

«  »*«««« 

Tlie  result  to  importers  is  one  of  great  per- 
plexity and  embarrassment  in  those  cases  of 
fre(iuent  occuiTcnce  in  which  they  are  unable 
at  the  time  of  shipment,  and  making  out  their 
invoices,  to  determine  precisely  what  is  the  ac- 
tual cost.  If  they  should  make  a  mistsike  they 
are  guilty  of  an  irregularity,  which,  as  shown 
in  the  case  of  Phelps,  Dodge  &  Co.,  subjects 
them  to  the  penalty  of  forfeiture.  The  prac- 
tice is  a  shaving  practice  upon  its  very  face, 
besides  putting  ituporters  in  conf.tant  peril  ; 
and  if  it  be  the  proper  interpretation  of  the 
law,  then  it  is  legal  .shaving.  Such  a  law 
ought  to  be  repealed  forthwith. 

The  government  ought  to  decide  whether  it 
will  take  the  co.st  value  or  the  market  value  as 
its  standard,  and  then  adhere  to  the  one  it  se- 
lects, at  least  in  all  cases  to  which  it  is  appli- 
cable. This  dodging  between  two  values  ac- 
cording as  the  one  or  the  other  is  the  highest, 
while  perplexing  to  importers,  is  a  system  of 
revenue  shaving.  This  is  the  proper  name  for 
the  thing. 


[From  TuK  Boston  Advkktiske,  April  18,  1873.] 

We  do  not  suppose  that  this  result  will  per- 
manently affect  the  high  character  which  the 
house  of  Phelps,  Dodge  &  Company  has  al- 
ways borne.  But  there  is  a  moral  in  it  which 
it  becomes  our  lawmakei-s  to  seriously  consid- 
er. The  situation  under  our  customs  detect- 
ive system  is  practically  thus:  Any  iniport 
ing  house  may  any  day,  upon  false  or  garbled 
information,  find  itself  visited  by  irresponsible 
persons,  who  may  seize  their  books  and  papers, 
and  fix  damages  at  whatever  sum  they  please. 
If  the  importer,  in  his  indignation,  resists,  he 


28 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


may  find  himself,  after  an  expensive  and  vex- 
atious suit,  exactly  Avhere  lie  was  at  first,  minus 
his  expenses,  and  he  may  be  much  worse  off 
than  this.  If,  to  avoid  all  this,  he  settles  for  a 
round  sum,  he  is  placed  by  one  half  the  com- 
nmnity  in  the  category  of  thieves,  while  the 
other  half  censure  him  for  allowing  himself  to 
be  bullied  into  a  surrender.  The  detectives 
and  other  interested  officers  meanwhile  range 
at  will.  If  their  forays  are  successful,  they 
get  a  large  part  of  the  booty,  and  moreover 
an  increase  of  importance  and  that  keen  sense 
of  power  which  a  subordinate  feels  in  bring- 
ing a  wealthy  merchant  to  his  knees.  If  the 
shot  fails,  the  officer  still  has  nothing  to  fear. 
He  can  hunt  for  other  game.  We  are  shocked 
at  the  state  of  society  when  the  robber  barons 
of  the  Rhine  used  to  sally  from  their  castles 
and  carry  off  the  trains  of  passing  merchants ; 
but  with  a  slight  difference  of  externals  we 
fancy  that  in  the  nineteenth  century  the  in- 
stitution is  not  quite  extinct. 


[From  The  New  Orleans  Times,  April  25, 1873.] 
EXTORTION  UNDER  THE  TARIFF  LAWS. 

Messrs.  Phelps,  Dodge  &  Co.,  of  New  York, 
the  largest  metal  importing  firm  in  the  coun- 
try, have  published  a  statement  explaining  the 
compi'omise  which  they  recently  made  with 
the  United  States  Treasury  Department.  The 
statement  is  admitted  on  all  hands  to  be  cor- 
rect in  all  material  particulars.  It  shows 
that  within  the  past  five  years  Messrs.  Phelps, 
Dodge  &  Co.  imported  over  $40,000,000 
worth  of  metal  Avare,  on  which  they  have 
paid  over  $8,000,000  in  duties;  that  the 
whole  amount  of  irregularities  charged  against 
them  did  not  exceed  $2,000 ;  and  that  these  oc- 
curred without  any  intention  of  fraudulent  eva- 
sion of  the  law,  but  from  the  utter  impossibility, 
mider  the  complications  and  contradictions  of 
the  law  itself,  of  avoiding  occasional  discrep- 
ancies. 

And  yet  for  the  pitiful  sum  of  $2,000,  al- 
1  eged  to  be  lost  by  the  Government  by  reason 
of  such  inevitable  discrepancies,  the  books 
and  papers  of  these  importers  were  seized, 
their  business  was  interrupted,  and  they  were 
proceeded  against  for  the  forfeiture  of  $1,000,- 
OOO  worth  of  goods,  included  in  fifty  invoices 
alleged  to  contain  errors  in  a  number  of 
items  to  the  value  of  271,000.  The  last 
named  sum  was  offered  by  tlie  firm  in  settle- 
ment, and  was  accepted  by  the  Treasury  De- 
partment, which  claims  in  so  doing  to  have 
acted  generously,  inasmuch  as  it  did  not  take 
a  million  by  confiscation. 

As  their  justification  for  not  contending  to 


the  extremity  of  litigation,  the  Messrs.  Phelps, 
Dodge  &  Co.  say  : 

If  there  arc  any  who  may  be  inclined  to  jndge  us 
harshly  for  such  a  decision,  we  would  ask  them  to 
recall  to  mind  the  peculiar  rigor  of  our  present  tariff 
law  ;  the  enormous  confiscations  which  it  is  allowed 
to  the  Government  to  make  under  it;  and  further- 
more, that  during  the  whole  continuance  of  the  suit, 
our  books  and  papers  would  be  under  the  control  of 
the  authorilics,  and  our  business  wouUl  be  liaLle  to 
be  interrupted  and  our  credit  affected  by  rumors  and 
misrepresentations  which  it  would  be  exceedingly 
difficult,  if  not  wholly  impossible,  to  at  once  refute 
and  answer. 

Such  revelations  are  a  disgrace  to  the  rev- 
enue system  of  the  country. 


[From  The   Lycoming  ( Williamsport,  Pa.,)  Gaz- 
ette, April  21, 1873.] 

In  this  complete  vindication  from  the  as- 
persions attempted  to  be  cast  upon  their 
house,  the  firm  has  been  greatly  strengthened 
in  the  public  estimation,  and  will  not  longer 
snffer  at  the  hands  of  enemies  who  have  been 
so  completely  disarmed  as  to  be  powerless  to 
inflict  the  most  trifling  damage. 

The  firm  of  Phelps,  Dodge  &  Co.  has 
large  interests  in  this  city,  and  other  portix)ns 
of  the  State,  and  frQm  this  fact  we  take  more 
pleasure  in  laying  their  very  full  and  conclu- 
sive statement  before  our  readers.  Wheu  it 
is  remembered  that  the  house  has  been  in  ex- 
istence for  a  long  series  of  years,  and  always 
enjoyed  a  reputation  for  honesty  and  integrity 
that  no  one  doubted  for  a  moment,  it  were  al- 
most unnecessary  to  adduce  any  proof  at  this 
juncture  to  squelch  the  reports  that  have  been 
put  in  circulation,  as  scarcely  an  individual 
could  be  found  who  fully  believed  them.  In  a 
business  involving  millions  of  dollars  it  is 
preposterous  to  suppose  that  such  a  firm 
would  hazard  its  reputation,  and  the  social 
standing  of  its  individual  members,  by  engag- 
ing in  petty  transactions  to  defraud  the  gov- 
ernment; but  when  confronted  by  such 
charges,  rather  than  rest  under  suspicion  for 
a  moment,  the  sum  alleged  to  be  due  was 
promptly  i)aid  over.  Very  few  firms  of  equal 
wealth  and  standing  would  have  submitted  to 
the  demand  for  a  moment,  but  resorting  to 
law  would  have  defended  themselves  in  the 
courts.  This  firm,  however  fully  conscious  of 
its  ability  to  show  no  intention  of  wrong,  was 
prompt  to  yield  to  the  government  demands 
and  vindicate  itself  afterwards.  After  a 
searching  investigation  it  stands  fully  exoner- 
ated. An  cMpial  amount  of  honor  on  the  side 
of  the  prosecution  should  prompt  the  imme- 
diate return  of  the  money  that  has  been  un- 
justly confiscated. 


COMMENTS  OF  TUE  PRESS. 


29 


[From  The  Detkcut  Tribukk,  April  21, 1878.] 

Tliis  statement  shows  a  Pciious  defect  in  our 
jiresent  laws  for  the  protection  of  our  customs 
revenue.  The  situation  under  the  customs 
detective  system,  is  8ul)stantially  this  :  Any 
importing;  house  may  any  day,  upon  false  or 
j:;arbled  information,  find  itself  visited  by  ir- 
responsible persons,  who  may  seize  their 
books  and  papers  and  fix  damaj^es  at  what- 
ever sum  they  i)lease.  If  the  importer  in  his 
indignation,  resists,  he  may  find  himself,  after 
an  expensive  and  vexatious  suit,  exactly 
where  he  was  at  first,  minus  his  expenses,  and 


he  may  be  much  worse  off  than  this.  If,  to 
avoid  all  this,  he  settles  for  a  round  sum,  he  is 
placed  by  one-half  the  community  in  the  cat- 
egory of  thieves,  while  the  other  half  censure 
him  for  allowing  himself  to  be  l>ullied  into  a 
surrender.  The  detectives  and  other  inter- 
ested olHccrs  meanwhile  have  a  free  field. 
Even  if  their  charges  are  ungrounded,  they  have 
nothing  to  fear,  and  only  wait  with  sharpened 
appetite,  for  the  next  victim.  The  whole  im- 
porting business  of  the  country  is  thus  placed 
at  the  mercy  of  a  gang  of  detectives,  always 
selfish  and  fre<iueutly  utterly  unscrupulous. 


COMMENTS   OF  THE  TIIADE  AND 
FINANCIAL  PRESS. 


[From  TuK  Suifping  and  Ck>MMRROiAL  List.] 

VINDICATION   OF   PHELPS,  DODGE 
&  CO. 

The  statement  of  Itfessrs.  Phelps,  Dodj^e 
&  Co.,  which  wo  herewitli  print,  must  be 
jidmitted.  by  every  fair-raindeil  rejvder  to  bo 
a  complete  vindieatit)n  of  any  intent  on 
their  part  to  defraud  the  Goverumeut.  It 
is  made  apparent  that  the  actual  loss  to  the 
revenue  through  their  transactions  with 
the  Government,  running  through  several 
years  and  involving  forty  millions,  was  not 
more  than  (wo  thonxandt/o/larM,  and  that  thin 
insignificant  loss  resulted  wholly  through 
inadvertence  and  the  intricacies  of  our  rev- 
enue laws,  which,  comprising  the  iniqui- 
tous undervaluation  and  spy  systems, 
stand  as  constant  impediments  to  legiti- 
mate commerce.  A  perusal  of  their  inge- 
nuous sttitement  carries  with  it  the  convic- 
tion that  this  old  and  honorable  firm  have 
been  the  victims  of  gross  injustice,  and 
the  all  but  universal  sentiment  is  that  they 
ought  not  to  have  made  a  compromise. 
They,  however,  otter  cogent  reasons  for  hav- 
ing done  so,  and  they  emerge  from  the  con- 
test, as  we  never  had  a  doubt  they  would, 
with  an  untarnished  reputation.  Tliis  vin- 
dication, while  showing  plainly  enough 
that  there  should  be  a  prompt  amendment 
of  statutes  which  harrass  the  legitimate 
mercantile  interests,  and  subject  them  to 
the  caprices  and  cupidity  of  informers,  is 
also  a  fitting  commentary  upon  the  course 
of  a  portion  of  the  partisan  press,   whose 


editors  accepting  rumors  as  self-proven 
truths,  and  wholly  ignoring  the  old  legal 
maxim  that  one  accused  is  to  be  held  in- 
nocent until  proven  guilty,  pronounced  the 
firm  culpable  and  amenable  to  severe  pun- 
ishment. Tlie  upshot  of  the  matter  is  a 
severe  rebuke  to  a  class  of  people  who  are 
prone  to  lend  a  willing  ear  when  calumny 
finds  a  shining  mark. 


[FramTuK  U.  8.  Mebcantilk  and  SmpiMNo  Adveb- 
TI8KB,  Ajyril  25, 1873.] 

THE  CASE  OF  PHELPS,  DODGE  &  CO. 

The  house  of  Phelps,  Dodge  &  Co.  has  so 
long  been  in  New  York  a  synonym  for  all 
that  is  honorable,  sti*aightforward  and  hon- 
est ;  hivs  so  long  been  an  almost  venerated 
name  in  this  community  throughout  the 
United  States;  in  fact,  throughout  the 
whole  civiliijed  world,  held  up  to  the  rising 
generation  as  an  example  worthy  of  imi- 
tation ;  their  chamcter  as  men,  as  merch- 
ants, as  Christians,  has  stood  so  high,  that 
when  the  foul  breath  of  slander  tarnished 
for  a  brief  jicriod  their  fair  fame  by  the 
aspersions  that  have  so  lately  been  cast  upon 
them,  and  out  of  which  they  have  emerged 
with  so  spotless  a  reputation,  a  feeling,  a 
deep  feeling  of  surprise  and  sorrow,  per- 
vaded the  entire  city.  Men  wondered  and 
whispered,  scarcely  daring  to  speak  the  al- 
most impossibility  of  such  an  occurrence. 
As  time  rolled  on  the  thing  took  shape.  It 
was  said  that  this  house,  that  had  stood  so 
high ;   tliis  house   that  had   withstood  so 


30 


THE  CASE  OF  rUELPS,  DODGE  &  CO. 


many  rcviilBioiis  —  revulsions  that  had 
caused  so  many  to  totter  and  still  more  to 
fall — that  this  staunch  old  shij)  had  at  last 
been  wrecked ;  had  defrauded,  systemati- 
cally defrauded  the  United  States  Govern- 
ment. And  how  did  the  old  house  behave 
under  these  trying  circumstances  ?  How  ? 
Why  just  as  might  have  been  expected 
from  the  high-toned  character  of  the  men 
who  composed  the  firm.  They  at  once  in- 
vited a  most  rigid  examination  of  their 
books,  their  papers,  and  even  their  private 
memoranda.  Not  only  so,  but  they  gave 
their  personal  assistance  to  the  parties  de- 
puted by  government  for  that  purpose. 
And  the  moment  the  technical  (for  the 
error  was  entirely  technical)  difference  was 
made  apparent  to  them,  they  at  once, 
promptly  and  of  their  own  accord,  paid 
into  the  treasury  every  possible  dollar  that 
by  any  stretch  of  calculation  could  be 
claimed  by  Government.  Had  they  been 
less  sensitive,  had  they,  instead  of  obeying 
the  impulse  of  their  high-strung  sense  of 
honor,  allowed  the  case  to  be  brought  be- 
fore the  courts,  no  jury,  no  twelve  men, 
would  have  decided  against  them.  Having 
thoroughly  examined  the  whole  matter  for 
our  own  satisfaction  as  well  as  froma  sense 
of  duty,  to  ascertain  the  real  merits  of  the 
case,  having  read  attentively  the  whole  pro- 
ceedings, and  made  the  most  liberal  calcula- 
tions, we  cannot  see  how  the  Government 
could  possibly  have  been  entitled  to  a  dollar. 
But  give  the  United  States  the  benefit  of  a 
doubt,  and  a  very  strong  doubt  at  that,  we 
cannot  see  how  they  could  claim  more  than 
about  ten  thousand  dollars.  The  fact  is 
the  importer  is  so  hedged  in  by  technicali- 
ties that  he  should  have  at  hand  on  all  oc- 
casions a  skillful  lawyer.  We  regret  that 
the  cloud  should  have  arisen ;  but  it  has 
passed,  and  the  bright  sun  of  perfect  con- 
fidence in  the  integrity  of  the  house  has 
cleared  the  atmosphere  of  any  possible  doubt. 
The  occurrence  has  rallied  around  them 
hosts  of  friends  of  every  grade,  from  the 
merchant  to  the  laborer.  Men  who  feel  a  just 
pride  in  the  standing  of  such  men  and  who 
feel  a  corresponding  contempt  for  the  cause 
of  this  temporary  unpleasantness  ;  the  man 
who  could  so  far  forget  liis  manhood  as  to 
vent  his  spite  upon  those  who  had  nour- 
ished him ;  the  man  who  in  his  own  person 
has  exemplified  the  truth  of  iEsop's  fable 
of  the  viper  warmed  to  life  in  the  kind 
man's  bosom.  Fortunately  all  men  are  not 
black-hearted.  Accidentally  we  met  at  a 
large  establishment  in  the  upper  part  of  the 
city,  where  he  is  now  employed  as  common 
working  man,  one  who  was  formerly  in 


Phelps,  Dodge  &  Go's  establishment.  In  his 
hearing  the  name  of  the  house  was'mention- 
ed.  It  would  have  warmed  the  heart  of  each 
member  of  the  firm  to  hear  the  honest, 
warm-hearted  expressions  of  this  humble 
laborer.  It  showed  the  inner  working  of 
the  house  ;  the  little  matters  apparently  in- 
significant in  themselves,  but  after  all  the 
true  test  of  character.  "  Ay,"  said  this 
warm-hearted  Irishman,  "  I  was  not  worth 
my  salt  for  over  three  months,  and  my 
wages  went  on  ;  they  never  let  me  suffer  ;" 
and  this,  he  said,  was  the  practice  of  the 
house  to  all  their  employes,  no  matter  what 
their  grade.  They  practice  what  they 
preach.  These  remarks  we  have  made 
from  a  sense  of  duty.  We  feel  x^roud  to 
think  that  the  house — particularly  the  old- 
er members — shall  have  the  gratification 
to  know  that  the  foul  tongue  of  slander  can- 
not blot  out  the  work  of  a  well-spent  life,  can- 
not mar  the  beautiful  edifice  so  carefully 
reared  ;  and  we  feel  proud  that  we,  as  in- 
dependent journalists,  can  contribute  our 
share  to  replace  them  in  their  proud,  well- 
earned  position.  Their  immediate  friends 
need  no  word  of  ours,  but  many  an  eye 
will  scan  these  pages,  with  whom  we  hope 
this  little  tribute  to  sincere  worth  may 
have  its  effect.  The  character  and  stand- 
ing of  the  house  has  so  long  been  part  and 
parcel  of  our  city — ^has  been  so  long  a  prop- 
erty in  which  we  each  owned  a  share  that 
we  could  ill  afford  to  lose  it.  We  rejoice 
that  they  have  shown  themselves  to  be  hon- 
est men — the  noblest  works  of  God. 


[From  The  N.  Y.  Com.  Bullktin,  April  16,  1S73.] 
AN  HONORABLE  VINDICATION. 

The  explanation  by  the  firm  of  Phelps, 
Dodge  &  Co,,  published  in  another  part  of 
to-day's  Bulletin,  relative  to  the  charges  of 
alleged  undervaluation  of  invoices,  will  bo 
read  with  interest  by  the  public,  and  more 
especially  by  the  mercantile  community. 
This  vindication  from  any  willful  intent  to 
defraud  the  government  is  full  and  com- 
plete, a  fact  which  gives  this  journal  the 
more  satisfaction,  as  it  has  from  the  fii\st 
refused  to  join  in  the  general  and  unfound- 
ed imputations  against  a  firm  of  fifty  years' 
honorable  standing  in  this  city.  Character, 
even  in  these  times  of  corruption,  counts  for 
something,  and  we  believe  that  no  fair- 
minded  person,  after  an  intelligent  under- 
standing of  the  facts,  will  hesitate  to  ac- 
knowledge that  Phelps,  Dodge  &  Co.  stand 
exonerated  from  all  intentional  fraud. 


COMMENTS  OF  THE  TRADE  AND  FINANCIAL  PRESS. 


31 


Technically,  no  doubt,  there  was  an  in- 
fringement of  the  letter  of  the  law,  but 
this  infringement  was  more  the  fault  of  the 
law  itself  than  of  the  firm.  Our  tariff 
laws  are  so  complicated  and  contradictory, 
and  are  so  loaded  down  with  vexatious 
Custom  House  regulations  and  Treasury 
decisions,  that  it  is  almost  impossible  to 
avoid  some  mistakes,  and  particularly  so 
in  the  case  of  goods  specially  manufac- 
tured abroad  by  branches  oi  American 
firms.  The  only  mistake  of  Phelps,  Dodge 
&  Co.  consisted  in  their  not  bringing 
their  case  before  a  jury  of  their  country- 
men. If  this  had  been  done,  their  inno- 
cence would  have  been  fully  established. 
But,  jealous  of  their  honor,  the  firm  con- 
ceded everything  that  was  technically  ad- 
vanced against  them  by  interested  iniorm- 
ers,  with  a  temporary  loss  of  reputation 
that  is  now  somewhat  tardily  but  effectu- 
ally restored  by  their  straight  and  manly 
vindication. 


[Fram  Thk  U.  S,  Tiiadk  Rkportkk,  Aprilii,  1878.J 

VINDICATION  OF  MESSRS.  PHELPS, 
DODGE  &  CO. 

This  eminent  house  have  published  with- 
in a  few  days  past,  a  conii)lete  vindication 
of  themselves  from  the  charges  heretofore 
made  agjiinst  them,  with  reference  to  their 
transactions,  for  several  years  past,  with 
the  revenue  department  of  the  General 
Gtjvemment.  They  were  charged  with  ir- 
regularities and  fraudulent  oi>enition8,  in 
the  nature  of  undervaluations,  to  a  vast 
amount ;  and  the  most  extravagcnt  and  un- 
warrantiible  statements  were  made  with 
regard  to  them.  It  is  known  to  all  our 
readers  that  at  the  time  these  developments 
wore  first  made  wo  expressed  our  entire 
disbelief  in  the  charges,  and  our  confidence 
in  the  honor  of  the  house.  Being  ourselves 
old  residents  of  the  city,  and  familiar  with 
the  reputation  of  the  house,  especially  its 
senior  members,  we  have  never  for  a  mo- 
ment doubted  that  when  all  the  facts  be- 
came authoratively  known,  it  would  bo 
found  that  not  only  had  no  frauds  been 
committed,  but  no  irregularities  even,  of 
any  moment.  It  is  now  authoratatively  as- 
certained that  no  frauds  were  committed  ; 
and  that  the  irregularities  which  did  occur, 
and  which  in  a  business  like  theirs  it  would 
be  altogether  impossible  to  avoid,  amounted 
to  less  than  $3,000,  and  this  without  mak- 
ing allowance  for    over-valuations,  which 


are  admitted  by  the  Government  to  largely 
over-balance  this  amount.  Such  is  the 
slender  foundation  for  the  gross  attjicks 
that  have  been  made  upon  the  honor  of 
this  representative  establishment  of  Am- 
erica ;  attacks  that  had  their  origin,  as  now 
appears,  in  the  malice  of  an  assistant  clerk, 
who  had  been  been  previously  discharged 
by  them  for  malversation  in  office  of  the 
grossest  possible  character. 


[From  TuK  Financiai.  Chromiole,  April  17, 1878.] 
THE  CASE  OF  PHELPS,  DODGE  &  CO. 

Since  the  case  of  Messrs.  Phelps,  Dodge 
&  Co.  has  been  fully  settled  with  the  Gov- 
ernment the  firm  has  very  properly  pub- 
lished a  letter  giving  to  the  public  a  his- 
tory of  the  whole  transaction  and  vin- 
icating  their  own  reputation.  The  amount 
of  money  involved  was  of  small  importance 
compared  with  the  question  of  the  honor 
and  high  standing  of  one  of  the  oldest  and 
most  highly  respected  mercantile  houses  in 
the  city.  We  believe  that  to  every  candid 
reader  the  letter  of  Messrs.  Phelps,  Dodge 
&  Co.  will  carry  the  conviction  not  only 
that  they  had  ;no  intention  of  defrauding 
the  Government,  but  that  their  whole  trans- 
actions with  the  Custom  House,  involving 
the  entry  of  some  $40,000,000  of  goods  in 
five  years  past,  have  been  singularly  free 
from  frauds  or  evasions  of  the  law.  *     * 

If  the  firm  had  seen  fit  to  resist  the 
claim  and  brought  it  to  trial,  we  believe 
that  no  jury  in  the  land  would  have  been 
found  against  them.  But  they  entered 
upon  the  investigation  with  the  utmost 
confidence  of  their  own  inncxjence,  and 
with  the  exj)ectation  of  a  speedy  and  ami- 
cable adjustment  of  the  matter. 


[Ftom  TuK  Stovk  and  Tin  .Iournai.,  April  17, 1878.] 

PHELPS,  DODGE  &  CO. 

"We  print  in  another  column  a  letter  from 
Phelps,  Dodge  &  Co.  concerning  their  re- 
cent payment  of  $271,000  to  the  Treasury 
of  the  United  States.  Under  the  present 
condition  of  affairs  they  could  do  no  better 
than  this,  and  it  was  cheaper  for  them  to 
pay  than  to  continue  their  business  with 
the  danger  of  continual  interference  hang- 
ing over  their  heads.  With  a  few  of  the 
facts  of  the  case  the  public  has  been  con- 
versant for  some  time,  but  the  true  signifi- 
cance of  this  prosecution  has  never  before 
been  authoritatively  made  known.      It  is 


32 


TUE  CASE  OF  PUELPS,  DODGE  &  CO. 


simply  a  suit  carried  on  by  the  officials  of 
the  Treasury  for  their  own  ends,  and  not 
for  the  advantage  of  the  Government  or 
for  the  promotion  of  the  cause  of  justice. 
The  firm  strengthen  their  position  by  let- 
ters from  Hon.  Noah  Davis,  who  was  Dis- 
trict Attorney  at  the  time  the  suits  began, 
from  Mr.  Dudley,  late  Consul  at  Liverpool, 
and  from  Special  Agent  Jayne.  Mr.  Davis 
and  Mr.  Dudley  are  agreed  in  opinion  that 
no  wrong  was  intended,  and  Mr.  Jayne 
declares  that  stories  against  them  have  been 
greatly  exaggerated. 

Phelps,  Dodge  &  Co.  are  the  largest  metal 
importers  in  the  city  and  one  of  the  largest 
mercantile  houses  in  the  United  States. 
Their  business  extends  over  the  whole  of 
Europe,  as  well  as  America.  In  England 
they  are  obliged  to  keep  up  a  branch  house, 
which  buys  for  them,  frequently  on  long 
time,  and  under  peculiar  conditions,  and 
almost  every  steamer  brings  goods  to  them 
at  New  York.  They  purchase  sheet  iron 
in  Russia,  tin  from  the  Dutch  Government 
and  from  various  parties  in  England,  and 
other  metals  from  those  who  have  them  to 
sell,  wherever  the  commodity  may  be.  Of 
such  goods  as  they  receive  at  Liverpool  they 
have  frequently  but  little  time  to  make  a 
choice.  The  New  York  house  wishes  a 
certain  quality  of  sheet  tin  sent  over  im- 
mediately. The  goods  are  in  the  ware- 
house, but  the  proper  bills  have  not  been 
settled.  There  is  an  allowance  for  damage, 
for  demurrage,  or  for  interest  to  be  deduct- 
ed, and  the  proper  charges  are  not  to  be 
found  on  the  books.  But  the  tin  is  carted 
down  to  the  ships,  where  an  invoice  ac- 
companies it,  placing  it  at  the  Liverpool 
valuation.  There  will  frequently  be  a  dis- 
crepancy, sometimes  in  favor  of  one  and 
sometimes  in  favor  of  another.  But  our 
Government  is  of  a  frugal  turn  of  mind. 
When  the  cost  price  is  the  highest,  it  esti- 
mates by  cost ;  and  when  the  market  value 
is  highest  it  estimates  by  market  value.  It 
always  takes  the  choice.  It  has  discovered 
among  some  fifty  thousand  bills  rendered 
in  five  years,  discrepancies  in  fifty  in  which 
the  merchant  has  received  an  advantage, 
while  it  takes  no  notice  of  the  bills,  ten 
times  as  numerous,  in  which  the  Govern- 
ment has  received  more  than  its  due. 

We  all  recollect  two  or  three  years  ago 
when  Mr.  Sumner  delivered  his  speech  ask- 
ing for  consequential  damages  against 
Great  Britain.  Two,  three,  and  four  hun- 
dred million  dollars  were  the  sums  named 
by  i>ersons  who  were  conversant  with  the 
subject  as  necessary  to  fill  the  demand. 
Our  Government  adopted  his  theory,  and 


pressed  it  before  the  arbitrators  at  Geneva, 
but  the  sum  allowed  did  not  even  equal  a 
twentieth  of  that  asked.  It  is  now  thought 
and  justly,  that  our  Government  did  wrong 
by  pressing  for  exorbitant  damages  when 
the  items  which  could  be  proved  amounted 
to  so  little.  We  had  placed  ourselves,  in 
the  opinion  of  the  world,  in  the  position  of 
a  quarrelsome  litigant,  claiming  what  was 
not  our  own.  What,  then  must  be  imagined 
when  the  United  States,  being  their  own 
arbitrators,  and  possessed  with  the  author- 
ity to  enforce  their  claims,  have  mulcted 
one  of  their  oldest  and  most  respectable 
mercantile  firms  for  a  purely  technical  of- 
fence in  a  quarter  of  a  million  dollars, 
where  the  Government  has  received  more 
than  its  just  dues,  where  the  United  States 
Consul  at  Liverpool  declares  that  the  dis- 
crepancies were  not  discrepancies  according 
to  the  usages  of  his  office,  and  where  the 
District  Attorney  was  constrained  to  say 
that  no  wrong  was  intended  ? 

A  careful  examination  of  the  books  re- 
veal the  fact  that  the  Government  has  been 
overpaid,  rather  than  underpaid.  It  would 
seem,  therefore,  that  the  Secretary  of  the 
Treasury  has  been  using  his  power  far 
otherwise  than  in  its  true  and  just  intent.  If 
upon  a  full  and  careful  examination  of  the 
matter  it  appears  that  the  money  due  for 
customs  has  been  paid  and  more  than  paid, 
it  looks  like  an  exhibition  of  spite  or  of 
cupidity  on  the  part  of  the  officials  in  in- 
sisting upon  the  pound  of  flesh.  However 
disgraceful  this  may  be,  these  seem  to  be 
the  real  facts  in  the  case.  Phelps,  Dodge 
&  Co.  have  nothing  to  be  ashamed  of. 
Their  books  have  been  under  examination 
for  four  months,  and  the  Treasury  has  been 
able  to  find  nothing  but  the  trifling  dis- 
crepancies of  which  we  have  spoken.  Their 
business  extends  to  many  millions  a  year, 
and  the  errors  claimed  by  the  officials 
amount  to  less  than  one  dollar  in  twenty 
thousand.  How  many  merchants  are  pre- 
pared to  say  that  their  books  would  not 
show  errors  as  great  as  that  ? 

The  informer  has  made  some  money,  if 
his  lawyers  have  not  absorbed  the  whole  of 
it ;  the  Custom  House  officials  have  reaped 
a  harvest ;  but  the  United  States  have 
taken  a  quarter  of  a  million  of  dollars  from 
a  mercantile  firm  on  a  strict  construction  of 
law,  where  no  money  was  rightfully  owing. 
Recollecting,  however,  the  constant  inter- 
ferences made  in  many  branches  of  trade  by 
revenue  officials,  and  notably  in  that  of  an 
eminent  metal  house  a  couple  of  years  ago, 
as  was  given  in  evidence  before  a  Commit- 
tee of  Congress,  they   thought  it  best  to 


COMMENTS  OF  THE  TRADE  AND  FINANCIAL  PRESS. 


33 


se  ttle  any  demands  rather  than  have  tlieir 
business  interfered  with.  They  are  prob- 
ably right. 


[From  The  Railroad  Journal.] 

Messrs.  Phelps,  Dodge  &  Co.,  the  oldest 
as  it  is  tlie  foremost  firm  in  the  metal  tnule 
in  this  city,  has  made  a  frank,  clear  and 
self -evidently  trutlif  ul  statcmeut  of  its  busi- 
ness relations  to  and  with  the  revenue  de- 
partment of  the  Government,  in  an  exhibit 
which  has  Ijeen  quite  extensively  publishe<l. 
For  many  months  the  house  had  been  as- 
sailed by  the  harjiies  of  the  revenue  ser- 
vice, and  their  political  backers,  in  (me  line 
or  another  and  charged  with  intenti(mal  de- 
ception and  fraud  in  the  entry  of  gooils  at 
this  x>ort,  at  undervaluations.  Much  of  the 
detraction  has  also  been  due  to  tratle  rival- 
ry and  jealousy.  The  house  was  thus 
forced  into  conflict  with  the  Treivsury  De- 
partment, its  business  embarrassed,  and  its 
honorable  record  impeached.  All  this,  too, 
while  the  respected  partners  in  the  concern 
in  this  city,  and  their  representatives  abroad, 
admittedly  made  every  jx)ssible  effort  to  en- 
able the  customs  officials  to  ascertain  the 
real  facts  of  the  case,  and  stood  ready  at 
all  times  and  under  all  circumstancjes,  to 
render  tt)  the  Government  all  its  just  dues, 
even  to  the  last  cent.  Threatened  with 
what  promised  to  become  protracted  litiga- 
tion, and  persistent  annoyance  in  the  pros- 
ecution of  its  legitimate  business,  though 
unconscious  of  any  intentional  wrongs,  it 
made  an  offer  of  compromise  as  the  lesser 
of  two  evils,  which  was  accepted  by  the 
Secretary  of  the  Treasury,  and  the  firm 
promised  exemption  from  further  prosecu- 
tion. In  the  published  statement,  this  em- 
inently trustworthy  house  makes  a  plain 
exhibit  of  the  whole  case,  in  the  confident 
belief  that  the  public  will  receive  its  expo- 
sition as  a  vindication  of  the  course  it  ad- 
opted to  put  a  summary  end  to  its  troubles. 


stantial  advantage  in  the  long  run,  and  had 
the  case  been  brought  to  trial,  there  can  be 
no  doubt  that  the  demand  of  the  Treasury 
for  penalties  would  have  been  set  aside.  It 
is  not  to  be  wondered  at,  however,  that  the 
firm  decided  that  to  compromise  the  case 
was  the  cheai>est  and  easiest  method  of  dis- 
posing of  it ;  but  it  is  a  stinging  satire  ui^on 
our  laws  for  the  protection  of  the  Treasury 
that  our  merchants  find  it  to  their  advantage 
to  compromise  unjust  claims  rather  than  de- 
fend their  rights  in  the  courts.  Probably 
twice  the  amount  voluntarily  paid  would 
not  have  compensated  tlie  firm  for  the 
losses  and  inconvenience  resulting  from  the 
surrender  of  their  books  and  papers,  and 
the  defence  of  their  case  when  the  Govern- 
ment should  be  rejuly  to  prosecute  it;  and 
while  it  is  to  be  regretted  that  they  did  not 
make  the  sacrifice  on  principle,  they  are  not 
to  blame  for  considering  their  interest  in  the 
matter  of  first  imiM»rtanco.  As  it  is  they 
lay  their  case  frankly  and  fully  before  the 
public,  and  wherever  their  statements  are 
I  accepted  as  truthful  their  character  for  up- 
;  right  and  honorable  dealing  will  l)e  fully 
:  vindicated. 


COMPLETELY  VINDICATED. 


[FrtMn  The  Iron  Aqe,  April  17, 1873.] 

Accepting  the  statements  of  Messrs. 
Phelps,  Dodge  &  Co.,  as  a  true  showing  of 
the  facts  of  the  case,  we  consider  that  they 
have  completely  vindicated  their  reputation, 
although  admitting  a  violation  of  the  letter 
of  the  law.  It  was  a  violation,  however, 
from  which  the  government  derived   sub- 


! 

j     [From  The  N.  Y.  Stookholder,  April  22,  1S78.1 

!       CUSTOM   HOUSE  CONFUSION. 

I 

]  The  recent  celebrated  case  of  Phelps, 
Dodge  &  Co.,  which  has  Ixjen  settled  tti  the 
manifest  credit  of  the  house,  illustrates 
what  we  copy  below  in  regard  to  the  con- 
fusing intricacy  growing  out  of  the  vast 
and  voluminous  system,  or  rather  want  of 
system,  of  laws  and  regulations  in  respect 
to  business  at  the  Custom  House.       *     * 

It  is  satisfactory  to  know,  from  the  full 
statement  that  accompanies  the  settlement 
of  the  matter,  that  the  house,  instead  of 
seeking  to  defraud  the  Government,  have 
actually  in  the  period  named,  overpaid  the 
customs  dues  on  the  goods  which  they  have 
imported.  How  it  has  happened  that  in 
some  instances  they  have  been  subjected  to 
penalties  for  under-payment  under  the  tar- 
iff laws  (Congress  has  passed  forty -five  dif- 
ferent tariif  laws)  and  the  innumerable 
Custom  House  regulations,  affords  some 
curious  manifestations  and  tendencies  in 
our  polity.  The  history  of  these  transac- 
tions out  of  which  this  eminent  firm  will 
come  into  unscathed  reputation,  the  result 
redounding  to  their  honor  rather  than  to 
their  discredit,  is  of  interest  not  only  in 
mercantile  circles,  but  cannot  fail  to  at- 
tract the  attention  of  the  general  reader. 


u 


THE  CASE  OF  PHELPS,  DODGE  k   CO. 


I /'rorrt  TlIK  MANUFACTtrKKHS'    ANO  MKRCIIANTfi'    IIk- 

viEW,  Ajyril  26, 1878.] 

PHELPS,  DODGE  &  CO. 

Ill  another  part  of  our  paper  will  be 
found  a  communication  from  Phelps,  Dodge 
&  Co.  containing  a  full  and  complete  ex- 
planation of  the  charj^es  that  have  been 
made  against  them.  When  these  attacks 
were  first  commenced  we,  in  our  issue  of 
January  18th,  expressed  our  opinion  in 
these  words :  "  No  one  who  knows  the  man- 
ner in  which  the  eminent  firm  of  metal  im- 
porters, Phelps,  Dodge  &  Co.  conduct  their 
business,  can  dbubt  that  the  charges  brought 
against  them  are  malicious  and  unfounded." 

Although  the  members  of  the  firm  have 
been  made  the  object  of  many  inuendoes 
and  reproaches,  they  have  wisely  remained 
silent  until  their  difficulties  with  the  Cus- 
tom House  officials  were  finally  adjusted. 
No  one  who  will  attentively  read  the  ex- 
planation which  we  publish  can  for  a  mo- 
ment doubt  that  the  charges  of  intentional 
fraud  were  entirely  unfounded.  What  er- 
rors have  been  made  are  due  to  the  unsat- 
isfactory and  conflicting  nature  of  our  vari- 
ous tariff  laws. 

We  feel  sure  that  the  many  friends  of  the 
firm  and  the  public  generally,  will  rejoice 
at  the  complete  vindication  of  the  honor 
and  integi-ity  of  Phelps,  Dodge  &  Co., 
whose  great  reputation  has  been  so  justly 
earned  by  many  years  of  commercial  pro- 
bity and  enterprise,  and  whose  partners 
have  individually  and  collectively  always 
borne  the  highest  moral  and  social  charac- 
ter. 


[Frovi  TnK  Wall  Strekt  Journal,  Api-il  17, 1878.] 
THE  FALSE  ACCUSATION 

AGAINST  THE  OLD  FIllM  OF  PHELPS,  DODGE 
&  CO.,  OF  NEW  YORK  CITY. 

For  some  weeks  past  the  columns  of  cer- 
tain journals  in  this  city  have  been  dis- 
graced by  accusations  against  this  old  and 
respected  firm,  of  deliberate  intention  to 
defraud  the  United  States  revenue. 

Under  the  present  system  of  confiscations 
for  alleged  undervaluations  in  Custom 
House  imports,  every  respectable  firm  is  at 
the  mercy  of  adroit  and  unscrupulous 
black-mailers,  and  as  a  shining  mark  the 
powerful  firm  of  Phelps,  Dodge  &  Co.  has 
not  escaped. 

Had  those  importers  taken  a  stand  in 
open  court,  they  could  have  laughed  to 
scorn  their  assailants ;  but,  comprising  a 
house  whose  business  cannot  be  stopped, 
they  submitted  to  a  compromise,  the  fol- 
lowing candid  and  convincing  statement  of 
which,  clearly  shows,  to  every  impartial 
mind,  that  they  never  had  the  slightest  in- 
tention, in  any  shape  or  way,  of  defraud- 
ing the  revenue. 

As,  however,  the  whole  case  has  been 
finally  settled  by  the  arrangement  between 
the  United  States  Government  and  Phelps, 
Dodge  &  Co.,  the  firm  could  not  have  done 
better  than  to  have  iiresentcd  all  the  fol- 
lowing facts  to  the  public,  the  frankness 
and  openness  of  which,  must  secure  for 
them  a  complete  acquittal  of  all  charges  of 
corruption  or  intentional  fraud. 


COMMENTS  OF  THE  RELIGIOUS  PI{ESS. 


35 


COMMENTS  OF  THE  RELKUOUS  PRESS. 


From  TiiK  Ni.w  Y<ikk  EvANfiKLiST,  yl;>H/24, 1878.]  |        |  From  Tiik  H.\iti«t  Wkkki.y,  April  24,  1873.1 


OUTRAGE  OF  THE  GOVERNMENT 
ON  PHELPS,  DODGE  &  CO. 

There  is  not  in  this  city,  nor  in  this 
country,  a  firm  which  stands  hij^her  than 
that  ot  Pliolps,  Dodge  tfc  Co.  Possessed  of 
enormous  woaltli,  its  loading  memlxjrs  have 
been  noted  for  a  character  eijual  to  their 
fortune.  Men  of  puhlic  spirit,  leiulers  in 
every  g<K)d  enteii)rise,  the  most  lilxjral  con- 
tributors to  our  cliaritablo  and  religious 
iissociations,  their  names  liave  been  justly 
lionorod  not  only  in  tliis  country,  but 
abroach 

What  then  was  tho  surprise  of  the  pub- 
lic to  learn,  some  four  months  ago,  that  a 
charge  had  been  made  against  tliis  firm  for 
defrauding  the  revenue.  The  matter  has 
been  a  long  time  in  negotiation  with  the 
Government,  and  has  at  last  been  settled  by 
the  payment  of  }i!271,()00.  This  would  at 
first  seem  to  imply  an  acknowledgement  of 
intentional  wrong,  but  the  explanation  just 
made  relieves  the  matter  so  completely  as 
to  be  a  source  of  great  satisfaction  to  all 
their  friends.  They  have  recently  pub- 
lished a  letter,  which  is  a  perfect  vindica- 
tion. From  this  it  api>ears  that  the  errors 
of  valuation  in  the  imi)orting  of  goods 
were  of  the  most  trifling  character ;  that 
the  Government  lost,  at  most,  but  two  or 
three  thousand  dollars,  and  as  quite  as  pften 
mistakes  were  made  in  over-valuation,  by 
which  they  paid  viore  tlian  they  ought,  the 
Government  really  lost  not  a  penny.  Yet 
by  a  few  trifling  eiTors  large  invoices  of 
goods  were  rendered  liable  to  seizure  and 
confiscation,  amounting  to  something  like  a 
a  million  of  dollars,  and  they  submitted  to 
pay  over  a  quarter  of  a  million  rather  than 
encounter  the  vexation  and  annoyance  of 
a  long  litigation,  which  might  inteiTupt 
and  injure  their  immense  business.  Of 
course  they  were  technically  wrong,  but 
not  morally  nor  intentionally  so.  That  in 
such  a  case  the  Government  should  have 
taken  advantage  of  such  slight  errors  to  in- 
flict so  large  a  penalty,  seems  to  lie  dis- 
graceful \o  all  the  officials  concomod. 


I  PHELPS,  DODGE  &.  CO. 

I  We  think  that  all  right-minded  and  cs- 
!  pecially  all  Cliristian  men  will  rejoice  in  the 
t  complete  and  satisfactory  manner  in  which 
these  princely  merchants  have  vindicated 
themselves  from  the  charges  of  having  de- 
frauded the  government  in  the  matter  of 
duties.  The  statement  which  they  have 
;  submitted,  accompanied  as  it  is  with  doc- 
umentary proofs,  is  at  once  eminently  clear, 
candid  and  convincing.  To  any  one  at  all 
acquainted  with  the  gentlemen  who  com- 
l)ose  this  firm,  the  very  idea  would  seem  to 
be  preposterous  that  for  the  paltry  sum  of 
less  than  ^8,000  of  government  duties,  run- 
ning over  a  x>eriod  of  five  years  and  involv- 
ing transactions  in  the  aggregate  of  |40,000,- 
(X)0,  they  should  perpetrate  or  connive  at  a 
scries  of  premeditated  frauds. 
I  The  only  mystery  which  we  have  con- 
fe8.sed  in  this  whole  affair  has  been  that 
I  these  gentlemen  have  comi)romised  with 
1  the  government  for  ;s^71,000.  But  this  is 
j  very  clearly  explained  in  their  published 
statement  and  shows  them  to  have  suffered 
great  injustice.  The  laws  of  revenue  seem 
very  peculiar  and  complicated.  They  pro- 
vide that  in  case  a  single  item  of  any  in- 
voices of  goods  coming  through  the  Cus- 
tom House  shall  have  been  undervalued,  it 
forfeits  tho  entire  invoice.  For  example  ; 
if  in  an  invoice  of  tin-plate,  amounting  to 
$5,000,  a  lot  whose  cost  is  only  $5  shall  have 
been  undervalued,  then  the  whole  $5,000  is 
forfeited  to  the  Government.  In  the  present 
case,  while  the  loss  of  duties  claimed  was 
less  than  $8,000,  the  amount  legally  forfeit- 
ed was  $1,000,000.  It  also  appears  that  the 
alleged  "  irregularities  "  were  of  the  most 
trifling  and  unimiK)rtant  nature,  necessarily 
beyond  the  knowledge  or  prevision  of  the 
firm  and  were  exposed  by  a  confidential 
clerk  who  shares  in  the  spoils  to  the 
amount  of  $70,000.  One  of  the  features  of 
the  case  which  has  more  tlian  any  other 
aroused  our  feelings  of  indignation  is  this, 
that  in  the  government  search  for  frauds 
they  have  found  that  the  system  which  had 


36 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


been  observed  by  Phelps,  Dod<^e  &  Co.  to 
average  prices  which  couhl  not  with  ex- 
actness be  arrived  at,  while  in  the  instances 
called  "irregular,"  the  Government  lost 
less  than  ^3,000,  on  the  whole  it  has  placed, 
in  the  United  States  Treasnry  many  times 
that  amount  to  which  the  Government  had 
no  right.  This  as  clearly  as  the  sunlight 
discovers  the  honorable  intentions  of  this 
Christian  firm.  While  they  have  lost 
money  and  suffered  an  outrageous  injustice, 
they  have  preserved  unsullied  their  pre- 
vious well-earned  reputation. 


[ /?Vo7n  The  New  York  Observer,  yl7>HZ  24,1873.] 

Because  the  honor  of  religion  is  at  stake, 
as  well  as  that  of  individuals  charged  with 
intent  to  defraud  the  Government,  we  have 
spread  out  at  great  length  in  our  paper  to- 
day the  statement  by  Phelps,  Dodge  &  Co., 
and  the  collateral  testimony  of  the  officers 
of  Government.  The  name  of  this  mercan- 
tile house  has  been  of  the  highest  repute  in 
this  city  for  the  last 'thirty  or  forty  years, 
its  credit  unlimited,  and  its  integrity  with- 
out stain.  Its  senior  member  is  and  has 
been  for  many  years.  President  of  the 
Chamber  of  Commerce,  a  position  which  de- 
clares the  confidence  reposed  in  him  by  the 
merchants  of  the  city.  He  is  President  of 
the  Evangelical  Alliance,  Vice  President  of 
the  American  Board  of  Foreign  Missions, 
a  leading  member  and  officer  of  philan- 
thropic and  charitable  institutions  of  the 
church. 

That  such  a  mercantile  house  should  be 
charged  with  fraud  is  in  itself  a  calamity 
second  only  to  that  of  being  convicted  of 
theft.  If  such  men  are  not  honest,  the 
faith  of  the  community  in  human  nature  is 
shaken,  and  the  shock  pervades  the  entire 
business  world.  More  than  this  it  brings 
into  suspicion  the  professions  of  Christian 
men,  and  so  damages  in  the  esteem  of  man- 
kind, that  religion  whose  principles  are  the 
best  safeguard  of  society. 

When  the  charge  of  fraud  was  first 
brought  against  this  house,  we  refrained 
from  giving  currency  to  the  calumny,  be- 
cause it  was  accompanied  with  no  attempt 
whatever  of  proof.  We  believed  then,  as 
it  is  now  abundantly  shown,  that  the  charge 
is  not  only  incapable  of  being  substantiated, 
but  that  the  firm,  in  its  transactions  with 
the  Government,  have  always  aimed  at 
doing  that  which  is  strictly  in  accordance 
with  the  true  intent  and  meaning  of  the 
statutes  so  far  as  they  are  capable  of  being 
understood. 


\^From  TiiR  Baptist  Union,  April  22, 18T3.] 
COUNTER  FRAUD. 
Every  loyal  citizen  must  feel  mortified 
and  dishonored  by  the  Custom  House 
transaction  with  Pheli)8,  Dodge  &,  Co. 
They  were  charged  with  defrauding  the 
Government  of  customs  duties,  but  it  now 
appears  that  the  crime  is  on  the  other  side, 
that  the  representatives  of  the  Government 
have  defrauded  them  in  the  most  cool  and 
deliberate  manner. 

*         *         ^t         *         *         *         * 

We  have  regarded  the  charges  of  fraud 
and  villainy  against  customs  officers  as 
partizan  and  unmerited,  and  our  sympa- 
thies have  been  decidedly  with  the  accused ; 
but  really,  the  very  worst  deeds  laid  to 
their  account  are  unequal  in  turpitude  to 
this  robbery  of  Phelj)s,  Dodge  &  Co.  Men 
who  can  be  guilty  of  conduct  so  unjust  and 
destitute  of  every  attribute  of  honor,  fair- 
ness or  decency,  will  do  anything,  that 
they  dare  do,  however  perfidious  and  mean. 
We  are  shamed  and  offended,  the  whole 
nation  is  disgraced  by  such  conduct ;  the 
President  and  his  Cabinet  are  involved ;  the 
party  in  power  is  implicated  ;  every  citizen 
is  injured  by  the  deed.  Must  we  believe 
that  the  Custom  House,  at  this  great  centre 
of  commerce,  with  all  its  vast  powers  and 
opportunities,  is  a  hive  of  conspirators, 
where  cunning  devices  are  invented  to  de- 
fraud the  public  ?  Has  it  become  an 
enemy  to  be  dreaded,  an  instrument  of  op- 
pression and  wrong  ?  It  is  the  focus  of 
national  wealth  and  power,  and  should  be 
the  seat  of  fidelity,  honor,  and  fairness.  If 
there  is  integrity  in  the  Government  any- 
where, it  should  be  manifest  here ;  if  offi- 
cials should  so  conduct,  and  laws  be  so 
administered  anywhere,  as  to  inspire  con- 
fidence and  friendship,  it  should  be  in  the 
public  offices  in  Wall  street.  But  all  con- 
fidence and  respect  must  be  destroyed  by 
such  perfidious  transactions  as  this  with 
Phelps,  Dodge  &  Co.  We  were  distressed 
when  insinuations  hurtful  to  their  fair 
fame  were  published,  and  now  we  are  still 
more  distressed  by  the  disgrace  public 
officers  have  brought  upon  the  chief  insti- 
tution of  the  nation,  and  upon  the  nation 
itself.  We  hope  that  the  authorities  at 
Washington  will  take  some  measures  to 
correct  the  wrong  done,  and  atone  for  the 
dishonor  incurred. 


[From  The  Metuodist,  April  26,  1873.] 
PHELPS,  DODGE  &  CO. 
When  the  charges  of  intentional  fraud 
upon  the  Government  were  made  against 


COMMENTS  OF  THE  RELIGIOUS  PRESS. 


37 


Messrs.  Plielps,  Dodge  &  Co.,  of  this  city, 
we  kept  in  mind  two  facts:  That  the 
transactions  of  importers  with  the  Custom 
House,  under  our  complicated  tariff  regu- 
lations, make  them  liable  continually  to 
technical  violations  of  tlie  law,  and  that 
this  eminent  house  had,  a  few  months  ago, 
detected  and  exposed  a  conspiracy  to  ruin 
their  trade.  Through  the  connivance  of  a 
dishonest  porter,  their  books  had  been  sur- 
reptitiously examined,  and  copies  of  their 
private  correspondence  tiiken.  "We  were 
not  disposed,  therefore,  to  join  in  the  hue 
and  cry  raised  when  they  were  accused  of 
dishonorable  practices. 

In  the  city  papers  of  April  IGtIi,  Messrs. 
Phelps,  Dodge  &  Co.  announce  the  settle- 
ment of  the  claim  of  the  Government 
against  them,  and  state  their  case.  In  the 
last  five  years  their  importations  of  metals 
have  amounted  to  forty  millions  of  dollars. 
It  is  not  claimed  by  the  Government  tlxat 
there  has  been  any  irregularity  in  their 
important  transactions.  These,  therefore, 
may  be  put  out  of  the  case.  In  estimating 
the  values  of  odd  lots  of  goods,  the  tailings 
of  long  contracts,  their  Liverpool  house  had 
adopted  the  practice  of  averaging  cost,  so 
tliat  the  Government  may  have  lost  in 
duties  between  $2,000  and  $4,000.  They 
claim  that  they  have  paid  enough  duties 
on  over- valuations  of  such  lots  of  goods  to 
leave  a  very  large  balance  in  their  favor. 
An  example  will  show  what  this  means. 
We  quote  from  Phelps,  Dodge  &  Co. : 

"As  further  proof  and  Illustration  of  our  statements 
we  {five  Uie  followiufj  example  of  one  of  the  memo- 
randa returned  to  us  by  the  aulh<irities  after  settle- 
ment, and  regarded  by  them  as  fully  conelusive 
against  us:  In  July,  IbTl,  we  reeeived  i>er  steamer 
Algeria  an  invoice  of  2194  boxes  tin  plates,  included 
under  which  was  a  lot  of  174  boxes  of  odd  sizes, 
'^4.v24XXXX,  and  24xl3)<XX  (marks  which  thi» 
trade  will  understand),  the  remnant  of  an  old  an<i 
special  contract.  All  thew  goods,  it  is  a<lmilted  by 
the  Government,  wore  invoiced  at  their  true  market 
value  at  the  time  of  shipment,  were  so  certified  by 
the  Consul  at  Liverpool,  and  so  passed  after  exami- 
nation by  the  appraiser  in  New  York.  But  there 
was,  in  addition,  a  memorandum  transmitted  appris- 
ing us  that  the  174  l>oxe8,  in  virtue  of  an  old  contract, 
would  be  charged  to  the  Liver|K)ol  liousc  at  a  price 
which  differed  from  the  then  actual  market  value  to 
the  extent  of  about  a  sixpence  per  box.  The  total 
value  of  the  whole  invoice  was  £^237 :  14«.  The  total 
value  of  the  174  boxes  was  £293 :  is. :  2d.,  and  the  dif- 
ference between  the  actual  market  value  of  these 
last  and  their  contract  cost  was  £4 :  7«. ;  on  which 
difference  the  duty  of  twenty-five  per  cent,  would 
have  amounted  to  £1 :  l«. :  9(/.,  or  a  little  more  than 
$5.  An<l  yet,  on  account  of  this  small  difference  in 
the  general  settlement,  as  a  penally  we  paid  the  full 
value  of  the  174  boxes— namely,  £298 : 4s. :  2rf.,  or 
upward  of  $l4(Xi.  And  thus  the  delinquencies  ran 
throughout  the  whole  of  this  extraordinary  trans- 


Messrs.  Phelps,  Dodge  &  Co.  state  that 
the  attention  of  the  heads  of  the  house  was 
not  called  to  these  slight  differences  ;  that 
when  charged  with  them,  they  placed  their 
books  immediately  at  the  disposal  of  the 
Government,  and  gave  all  assistance  in 
promoting  investigation.  They  append, 
also,  letters  from  the  prosecuting  officers  of 
the  Government,  acquitting  them  wholly 
of  intentional  wrong.  The  case  as  con- 
tained in  the  papers  presented  is  so  clear 
that  the  public  verdict  is  unanimously  in 
their  favor. 

Here,  then,  is  a  technical  violation  of 
revenue  laws  so  comi)licated  that  it  puzzles 
an  honest  importer  to  ct^mply  with  them  in 
every  detail.  Between  two  merchants 
there  would  have  been  a  settlement  by  the 
payment  of  actual  differences.  But  the 
Government  has  fined  Phelps,  Dodge  &  Co. 
$271,000.  We  will  not  say  that  in  this  in- 
stance the  Government  has  done  a  great 
injustice,  but  we  think  that  if  the  case 
could  have  gone  to  a  jury,  Phelps,  Dodge 
&  Co.  would  not  have  been  mulcted  in  any 
such  amount  of  money. 


[From  The  Cukistian  Advooatk  and  Journal.] 

A  few  weeks  ago  the  name  of  the  well- 
known  firm  of  Phelps,  Dodge  &  Company 
was  in  all  the  papers,  coupled  with  the 
most  damaging  allegations  of  fraud  com- 
mitted by  that  liouso  agiiinst  the  G<;neral 
Government.  It  was  painfully  interesting 
to  notice  with  what  ill-concealed  satisfac- 
tion the  scandal  was  passed  from  paper  to 
paper  and  from  mouth  to  mouth,  accom- 
panied with  sneers  at  the  religious  reputa- 
tions of  some  of  the  chief  members  of  the 
firm.  Wo  preferred  to  await  in  silence  the 
developments  that  time  was  sure  to  make 
than  to  attemjit  to  reach  a  conclusion  on 
incomplete  information.  Nor  have  wo 
waited  in  vain  ;  but  time  has  fully  justified 
our  best  hopes  in  the  matter.  These  points 
appear  now  to  be  pretty  well  established : 

1.  That  the  damaging  accusation  origi- 
nated with  one  of  the  late  clerks  of  the 
firm,  who  by  presenting  garbled  extracts 
from  their  books  made  out  a  prima  facie 
case  against  them. 

2.  That  had  the  case  been  as  pretended 
there  would  have  been  no  proof  of  inten- 
tional fraud,  since  on  account  of  tlie  com- 
plexity of  the  revenue  laws  one  may  with 
the  best  intentions  go  contrary  to  their 
demands. 

3.  That  the  whole  amount  of  under- 
valuations  that   can   be  made  out  is   less 


38 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


than  $4,000 ;  while  much  larger  over- valua- 
tions by  the  Government  during  the  same 
time  is  shown  ^on  the  other  side.  Perhaps 
the  firm  may  be  made  to  suifer  in  the  case, 
for  in  a  conflict  between  the  Treasury 
Department  and  an  importing  house  the 
advantage  is  all  on  one  side.  Technical 
irregularities,  as  judged  by  the  officers  of 
the  Customs,  may  possibly  be  made  out, 
and  their  extremest  penalties  demanded  ; 
but  the  defendants  in  this  case  will  cer- 
tainly save  what  is  ab3ve  all  else  valuable 
to  themselves — their  good  name. 


{From   The   (^Pittsburgh)   Peesbytbrian   Banner, 
April  80, 1878.] 

A  FLAGRANT  EXTORTION. 

The  well-known  house  of  Phelps,  Dodge 
&  Co.,  of  New  York,  has  submitted  a  state- 
ment to  the  public,  attested  by  Govern- 
ment officials,  which  reveals  a  state  of 
things  anything  but  creditable  to  our  rev- 
enue system  or  to  those  entrusted  with 
this  department  of  our  national  Govern- 
ment. 

******* 

The  result  is,  that  this  house,  rather 
than  enter  upon  a  long  and  harassing  con- 
test with  the  Government  and  trusting  to 
its  sense  of  equity,  has  been  compelled  to 
pay  the  sum  of  two  hundred  and  seventy- 
one  thousand  dollars,  one-half  of  which 
goes  to  the  informer  and  three  or  four 
Federal  office  holders,  while  in  equity  not 
one  dollar  of  unpaid  duties  was  owing  to 
the  Government.  If  there  had  been  the 
shadow  of  right  in  the  claim,  the  forfeiture 
ought  to  have  been  one  million  of  dollars, 
and  the  members  of  the  firm  should  have 
been  held  criminally  liable  for  violating 
the  revenue  laws.  Either  the  Government 
has  been  defrauded  out  of  seven  hundred 
and  twenty-nine  thousand  dollars,  or  two 
hundred  and  seventy-one  thousand  dollars 
have  been  most  unjustly  extorted  from 
Phelps,  Dodge  &  Co.  The  facts,  fully  ex- 
amined, prove  that  the  latter  is  the  case, 
and  there  is  no  use  in  mincing  words  about 
the  matter.  Owing  to  clumsily  framed 
laws,  a  rascally  informer  and  three  or  four 
office  holders  have  enriched  themselves,  by 
a  most  iniquitous  proceeding  against  a 
great  mercantile  house  whose  fame  is 
known  throughout  the  world.  To  cheat 
the  Government  is  universally  conceded  to 
be  a  great  crime ;  but  how  shall  we  proper- 
ly designate  the  act  of  a  Government  which 
allows   such  a  wrong  to  be  inflicted  upon 


any  of  its  subjects  ?  This  is  an  occurrence 
in  which  every  American  citizen  is  in- 
terested, and  in  which  the  honor  of  our 
country  is  involved.  No  Government  has 
a  right  to  inflict  injury  upon  its  own  citi- 
zens, any  more  than  to  commit  outrages 
against  other  countries.  The  property  and 
the  reputation  of  the  citizen  are  as  sacred 
as  the  rights  and  the  authority  of  the  Gov- 
ernment. 


[From  The  Christian  Union,  May  7, 1873.] 

THE  CASE  OF  PHELPS,  DODGE  &  CO. 

If  we  have  been  too  long  silent  in  rela- 
tion to  the  matters  at  issue  between  the 
Government  and  the  well-known  firm  of 
Phelps,  Dodge  &  Co.,  it  is  only  because  we 
wished  to  get  at  all  the  facts,  and  to  hear 
all  that  either  party  had  to  say,  before 
uttering  an  opinion.  And  now,  having 
waited  until  the  pleadings  are  ended,  it  is 
at  once  a  duty  and  a  pleasure  to  express 
our  conviction  that  the  statements  of  the 
accused,  not  having  been  invalidated  in 
any  essential  particular,  ought  to  be  ac- 
cepted as  a  complete  vindication  of  their 
integrity  in  the  transactions  which  were 
made  the  basis  of  an  accusation  or  fraud. 
It  seems  clear  that  their  infractions  of  the 
revenue  laws  were  the  result  of  an  misun- 
derstanding as  to  the  proper  construction 
of  those  laws,  and  that  they  lost  even  more 
by  overcharges  of  the  Government  than 
they  gained  by  under-estimates  of  the 
value  of  goods.  The  money  exacted  of 
them  was  an  outrageous  extortion  ;  the 
Government  had  no  right  to  it,  and  was 
dishonored  by  receiving  it.  No  one  ac- 
quainted with  commercial  affairs  can  doubt 
that  the  Custom  House  is  so  organized  by 
law  as  to  hold  out  irresistible  temptations 
to  roguery.  The  intricacies  and  discrepan- 
cies of  the  tariff  laws  tend  to  bring  officers 
and '  dishonest  merchants  into  collusion, 
regularly,  while  they  often  enable  greedy 
officials,  as  in  this  case,  to  persecute  the  in- 
nocent, and  put  money  in  their  own  pock- 
ets. The  charges  against  Phelps,  Dodge  & 
Co.  undoubtedly  had  this  origin  and  basis. 
Judge  Noah  Davis,  who  was  United  States 
District  Attorney  when  this  trouble  began, 
expressly  acquits  the  firm  of  any  intention 
to  defraud  the  Government,  and  says  that 
"  in  a  business  of  many  millions  of  dollars 
during  the  period  of  five  years  in  which 
these  irregularities  had  occurred,  and  dur- 
ing which  they  (the  firm)  had  paid  to  the 
Government  several  millions  of  dollars  in 
duties,  thfc  whole  amount  lost  by  the  alleged 


COMMENTS  OF  THE  RELIGIOUS  PRESS. 


39 


fraud  fell  short  of  the  sum  of  |3,000." 
The  great  error  of  Phelps,  Dodge  &  Co. 
was  ill  consenting  to  a  compromise,  which 
looked  like  an  admission  of  guilt,  instead 
of  allowing  the  matter  to  be  investigated 
in  open  court,  where  their  vindication 
would  no  doubt  have  been  complete.  The 
name  of  this  house  has  so  long  been  almost 
a  synonym  for  commercial  integrity  and 
public  beneficence,  that  good  citizens  of  all 
parties  must  rejoice  that  the  attempt  to 
fasten  upon  it  a  stigma  of  fraud  has  so 
signally  failed. 


[From  The  Independknt,  April  24,  1878.] 

GOVERNMENT  FLEECING. 

Phelps,  Dodge  &  Co.  have  submitted  a 
statement  to  the  public  in  reference  to  their 
revenue  difficulties  with  the  Government, 
accompanied  by  letters  from  Thomas  H. 
Dudley,  consul  at  Liverpool ;  B.  G.  Jayne, 
special  revenue  agent ;  and  Judge  Noah 
Davis,  District  Attorney  of  the  United 
States  at  the  time  the  proceedings  com- 
menced against  the  firm.  Assuming  the 
truth  of  the  statement,  which  we  have  no 
reason  to  doubt,  especially  as  it  is  con- 
firmed in  its  most  material  points  by  the 
letter  of  Judge  Davis,  whose  official  duty, 
as  District  Attorney,  made  it  necessary  for 
him  carefully  to  investigate  the  case,  we 
come  to  the  following  conclusions  of  fact : 
First,  that,  although  the  firm  had  techni- 
cally, by  an  unconscious  mistake,  mainly 
growing  out  of  tBe  complicated  nature  of 
our  revenue  laws,  rendered  themselves 
liable  under  these  laws,  they  stand  com- 
pletely exonerated  of  any  actual  intent  to 
defraud  the  Government  by  false  invoices. 
Secondly,  that  there  were  no  false  invoices, 
the  memoranda  on  which  the  proceedings 
were  instituted  not  being  invoices  at  all. 
Thirdly,  that  an  examination  of  their 
books,  covering  a  period  of  five  years,  dur- 
ing which  their  importations  amounted  to 
forty  millions  of  dollars,  with  the  payment 
of  about  eight  millions  in  duties  to  the 
Government,  shows  that  the  revenue  loss 
to  the  G^jvemment  by  under-valuations  is 
less  than  three  thousand  dollars,  while 
during  the  same  period  they  have  paid  a 
much  larger  sum  to  the  Government,  in 
excess  of  its  real  revenue  claims,  as  the 
consequence  of  over-valuations.  Fourthly, 
that  the  prosecution  was  instigated  by  a 
spy  in  the  character  of  a  clerk  who  had 
been  dismissed  for  good  reasons,  and  who, 
from  malignant  and  selfish  motives,  stole 
some  memoranda  and  destroyed  others,  so 


as  to  make  a  prima  facie  case  against  the 
firm. 

One-half  of  the  money  paid  goes  to  the 
informer  and  some  three  or  four  Federal 
officers,  whose  private  interests  are  served 
by  just  such  shameless  depredations  ujwn 
the  mercantile  community.  These  officers 
who  are  enriched  by  thousands  of  dollars, 
of  course,  like  the  compromise.  Such  com- 
promises are  a  very  fine  perquisite  to  their 
salaries.  The  President  has  recommended 
that  the  moiety  system,  which  furnishes  a 
strong  temptation  to  such  fleecing  opera- 
tions, should  be  wholly  abandoned.  The 
case  of  Phelps,  Dodge  &  Co.  supplies  a 
very  forcible  reason  for  following  this 
advice. 


[From  The  Exakimeb  and  Curomicle,  April 
18T8.] 


THE  PHELPS,  DODGE  & 
SCANDAL. 


CO. 


Some  months  ago,  when  the  testimony 
before  the  Credit  Mobilier  Committee  at 
Washington  was  daily  making  such  havoc 
with  reputations  previously  unspotted,  it 
came  to  pass  that  calumnies  were  believed 
by  many  in  proportion  to  their  blackness, 
and  the  estimation  in  which  the  accused 
had  previously  been  held.  The  atmos- 
phere was  full  of  doubt  and  suspicion.  It 
was  not  strange,  therefore,  that  when 
Messrs.  Phelps,  Dodge  «&  Co.,  of  this  city, 
were  accused  of  defrauding  the  Govern- 
ment in  the  matter  of  customs,  by  invoicing 
goods  at  less  than  the  actual  cost,  the  accu- 
sation should  have  been  believed.  The 
most  painful  feature  was  that  by  so  many 
it  was  so  eagerly  credited ;  that  so  few  were 
willing  to  wait  until  all  the  facts  were 
known,  before  passing  judgment;  and  last 
of  all,  that  the  long  and  honorable  career  of 
the  house,  and  the  unblemished  Christian 
character  and  well-known  generosity  of  its 
members,  were  allowed  so  little  weight  in 
the  scale  of  probabilities.  The  firm  have 
just  published  a  full  statement  of  the  case, 
substantiated  by  letters  from  the  officers  of 
the  Government  who  investigated  it,  which 
shows  how  cruel  are  the  suspicions,  and 
how  unjust  the  laws  under  which  they 
have  suffered. 

The  charges  against  this  firm  have  been 
circulated  far  and  wide,  and  commented 
upon  all  the  more  freely  because  the  senior 
members  are  so  well  known  as  earnest, 
active  and  generous  Christian  men — fore- 


40 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


most  in  every  good  work.  We  have  pro- 
tested from  the  beginning  against  con- 
demning, without  full  proof,  men  whose 
lives  have  been  one  long  and  eloquent  pro- 
test against  wrong,  and  we  hope  the  press 
generally  will  accord  to  the  firm  the  gen- 
erous exculpation  which  they  deserve. 
The  gist  of  the  whole  matter  is,  they  have 
paid  over  a  quarter  of  a  million  dollars  for 
the  technical  violation  of  a  law  which  it 
was  practically  impossible  to  obey. 


[From  The  Ciikistian  Intklligenceb,  May  8, 1S73.] 
PHELPS,  DODGE  &  CO. 

"We  have  withheld  the  expression  of  any 
mere  opinion  concerning  the  integrity  of 
this  well-known  firm,  because  every  one 
understands  the  relations  of  its  members  to 
all  Christian  interests,  and  would  give  lit- 
tle weight  to  any  debatable  conclusions 
which  a  religious  paper  might  state  in  their 
favor.  We  now  bring  together,  however, 
such  a  summary  of  the  facts  in  their  recent 
case  with  the  Government  as  will  dispense 
with   any   expression    of    our    opinion   or 

feeling. 

******* 

This  seems  to  end  this  carefully  culti- 
vated scandal,  except  as  concerns  those 
who  have  made  money  out  of  it.  The 
whole  reputable  press  has  decided  that  the 
transaction  leaves  no  stain  on  the  moral 
character  of  Phelps,  Dodge  &  Co. 


[From  The  N.  T.  Daily  Witness,  April  24, 1873.] 
GOOD  OUT  OF  EVIL. 

In  like  manner  Messrs.  Phelps,  Dodge  & 
Co.  have  suffered  at  the  hands  of  the  Cus- 
tom House  for  the  good  of  the  trade.  To 
gratify  an  infamous  combination  of  deeply 
interested  parties  (we  would  like  to  publish 
an  exact  account  of  how  the  enormous 
plunder  was  divided),  the  Secretary  of  the 
Treasury,  Boutwell,  consented  to  virtually 
black  mail  that  house  to  the  extent  of 
$271,000;  and  the  result  is  that  his  suc- 
cessor is  going  to  make  a  clean  sweep  of  the 
vexatious  and  contradictory  regulations 
which  made  that  great  piece  of  injustice 
possible. 

Especially,  we  doubt  not,  will  the  pro- 
visions of  the  present  law  be  materially 
altered  with  respect  to  the  shares  in 
seizures  and  fines  of  informers  and  Custom 
House  officers.  Indeed,  the  necessarily 
oppressive  character  of  all  revenue  laws, 
heightened  by  the  unnecessary  severity  of 


the  present  law,  may  have  a  decided  effect 
in  leading  to  a  milder  tariff  altogether, 
making  many  articles  free  which  are  now 
fettered  with  vexatious  and  comparatively 
unproductive  imposts,  and  diminishing  and 
simplifying  the  duties  on  others. 

In  view  of  its  probably  great  results, 
therefore,  importers  may  be  very  thankful 
that  this  case  of  oppression  has  occurred. 


[From  The   {Chicago)  Advance,  April  29,  1878.] 

The  long  and  explicit  statement  by 
Phelps,  Dodge  &  Co.,  of  the  circumstances 
which  led  to  their  prosecution  for  violation 
of  the  revenue  laws,  will  be  accepted  as 
good  evidence  that  they  were  guilty  neither 
of  intentional  nor  of  actual  fraud.  Proba- 
bly they  recognize  quite  as  keenly  as  will 
any  who  read  their  statement  that  they 
were  too  careless — more  careless  than  any 
one  has  any  right  to  be.  Technically  they 
violated  the  law.  But  it  has  cost  them 
$271,000,  and  they  will  not  be  apt  to  be 
caught  nodding  again. 


[From  The  {Chicago)  Interior,  3[ay  7,  1873.] 

"HOW  ARE   THE  IVIIGHTY 
FALLEN ! » 

During  the  past  few  months,  a  large  part 
of  the  press  of  the  country  has  been  teem- 
ing with  statements  emanating  from  Gov- 
ernment officials,  to  the  effect  that  one  of 
the  most  eminent  mercafltile  houses  of  the 
country  had,  during  a  term  of  years, , 
intentionally  committed  frauds  on  the  rev- 
enue. The  high  standing  of  the  firm,  the 
gravity  of  the  charge  made  against  them, 
and  the  amount  involved  (near  ^^2,000,000,) 
soon  attracted  the  attention  of  the  whole 
country,  and  expectation  was  on  tip-toe  for 
the  denouement.  Bad  men  railed  at  Chris- 
tianity, and  pointed  to  this  case  of  sup- 
posed infamy  as  a  stunning  blow  to  the 
Christian  religion.  Good  men  everywhere 
exclaimed  :  "  If  Phelps,  Dodge  &  Co.  can- 
not be  trusted,  whom  shall  we  look  to  for 
honorable  dealing  ?" 

The  agony  of  suspense  has  been  broken 
by  the  settlement  of  the  alleged  frauds ; 
an  explanation  by  the  firm  ;  and  a  rejoinder 
by  the  Government,  in  the  columns  of  the 
New  York  press,  covering  the  facts  of  this 
most  remarkable  case.  I^ow.  in  the  verdict 
of  a  discriminating  public  judgment,  loho 
haft  fallen  ? 

With  no  evidence  but  that  exhibited  by 
the  Government   itself,  every  fair-minded 


COMMENTS  OF  THE  RELIGIOUS  PRESS. 


41 


man  must  conclude  that  this  great  Govcrn- 
ment  has  fallen  from  the  dignity  belonging 
to  a  bulwark  of  defence,  until  it  has  be- 
come the  oppressor  of  the  innocent. 

We  will  quote  but  two  facts,  given  by 
the  United  States  District  Attorney,  as 
sufficient  to  demonstrate  the  truth  of  this 
statement  beyond  the  possibility  of  a  doubt: 

»  «  «  «  4r  «  « 

We  cannot  but  conclude  that  the  Govern- 
ment has  greatly  wronged  some  of  its  most 
valuable  supporters  in  this  case,  and  that 
the  law  under  which  it  has  been  possible  to 
perpetrate  the  outrage  sliould  receive  the 
attention  of  Congress  at  once.  If  the  work 
of  Government  detectives  in  discovering 
frauds  upon  the  revenue  shows  no  better 
scope  for  their  energies  than  such  cases  as 
this,  that  bureau  of  the  Treasury  depart- 


:  ment  should  be  abolished.  Give  us  specific, 
instead  of  ad  valorem  duties,  and  three- 
fourths  of  the  Custom  House  officials  can 
be  dispensed  with  ;  the  possibility  of  fraud 
will  be  diminished  tenfold,  and  the  same^ 
amount  of  importations  will  show  a  largely 
increased  revenue. 

The  religious  press  of  the  country,  espe- 
cially, should  make  the  Government  feel 
the  consequences  of  its  action  in  this  case, 
in  a  pungent  and  merited  condemnation  of 
its  course  towards  representative  men  in 
the  Christian  church,  whose  reputation  and 
business  have  been  assailed  without  cause, 
and  in  a  manner  that  affords  not  the  least 
excuse. 

The  sympathy  of  the  whole  country 
must  go  with  Phelps,  Dodge  &  Co.,  now 
that  the  facts  are  made  known. 


REJOINDER  FROM  WASHINGTON. 


A    TELEGRAPHIC  REJOINDER  FROM 
WASHINGTON. 


Subsequently  to  the  appearance  of  the  succinct  history  of  the  case,  with 
which  this  pamphlet  opens, — and  seemingly  called  forth  by  the  almost  unani- 
mous approval  wliich  the  newspapers  and  the  mercantile  commmiity  bestowed 
upon  it, — the  following  telegram  from  Washington  was  sent  over  the  wires  of 
the  Associated  Press  : 

Washington,  April  22. — Senator  Boutwell  contradicts  the  statement  of 
Phelps,  Dodge  &  Co.,  that  they  were  innocent  of  the  charges  of  fraudulent  in- 
voices, and  that  the  sum  of  $271,000  was  forced  out  of  them  by  way  of  a  com- 
promise in  their  recent  difficulty  with  the  department.  When  the  charges  of 
fraud  were  brought  against  that  firm  they  filed  a  statement  at  the  Treasury,  as- 
serting their  innocence,  and  offering  to  pay  the  $271,000.  Mr.  Boutwell,  who 
was  then  Secretary  of  the  Treasury,  declined  to  receive  the  money,  and  notified 
the  firm  that  the  courts  were  open,  and  if  they  were  innocent  of  the  charges  they 
should  go  into  court  and  prove  their  innocence.  Upon  this  notification  they 
withdrew  the  assertion  of  their  innocence,  and  it  was  then  that  their  ofier  to 
comjiromise  was  entertained.  The  Department  in  no  case  accepts  money  of  any 
party  charged  who  claims  to  be  innocent,  being  allowed  by  law  to  compromise 
with  offenders  only  after  guilt  is  admitted ;  and  it  was  on  this  distinct  under- 
standing that  the  compromise  with  Phelpa,  Dodge  &  Co.  was  made.  Never 
while  Mr.  Boutwell  was  at  tiic  head  of  the  Treasury  Department  was  any  com- 
promise made  with  persons*  who  claimed  to  be  innocent. 


COMMENTS  OF  THE  PRESS  UPON  THE  FOREGOING. 


[From  TiiK  Financikr,  ApHl  26,  1878.] 

DISCOURAGEMENTS  FOR  MERCANTILE 

BUSINESS. 

Mr.  Boutwell  naturally  objects  to  the  im- 
putation indirectly  cast  upon  his  management 
by  the  published  explanation  of  their  famous 
case  by  Phelps,  Dodge  &  Co.,  and  he  declares 
that  the  treasury  department  during  his  official 
term  never  compromised  with  anybody  except 
upon  the  either  open  or  tacit  admission  of 
guilt   on   the   part   of  the   latter ;    in   other 


words,  a  person  accused  of  attempted  fraud 
may  get  his  case  compromised  and  l)e  allowed 
to  escape  with  less  than  the  technical  penalty, 
provided  that  he  admits  that  he  is  guilty  and 
that  the  custom-house  is  very  merciful  towards 
him,  but  if  he  preserves  a  bold  front  and  pro- 
tests his  innocence  he  must  stand  a  trial  and 
all  it  involves.  But  Mr.  Noah  Davis,  who  as 
District  Attorney,  passed  upon  this  case  and 
advi.sed  the  acceptance  of  the  $271,000,  wrote 
to  Phelps,  Dodge  &  Co.  in  these  terms,  which 
could  not  be  stronger :  "  If  I  had  come  to  the 


46 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


conclusion  that  you  had  acted  with  actual  de- 
sign to  defraud  the  Government,  I  should 
have  insisted  upon  the  forfeiture  not  only  of 
the  value  of  the  articles  above  referred  to,  but 
of  the  entire  invoices  of  which  they  formed  a 
part,  amounting  to  fully  $1,000,000;  but  my 
examination,  with  the  explanations  made  to 
me  by  you,  showed  clearly,  as  I  thought  and 
still  think,  that  the  idea  of  defrauding  the 
Government  of  its  lawful  duties  had  never 
entered  your  minds." 

The  question  of  veracity  between  Mr.  Bout- 
well  and  Mr.  Davis  is  not  raised,  for  there  is 
no  square  contradiction  ;  but  taking  the  state- 
ment of  the  firm  with  that  of  Mr.  Davis,  there 
seems  to  us  no  reasonable  doubt  that  the 
exact  truth  has  been  told  and  that  the  Govern- 
ment, founded  and  designed  to  protect  indi- 
vidual rights,  has  come  down  so  low  as  to 
pillage  directly  from  individuals.  It  is  a 
sound  rule  in  law  courts  that  good  reputation 
counts  something  in  favor  of  an  accused  per- 
son, and  that  the  absence  of  motive  for  doing 
the  thing  charged  is  a  strong  presumption 
against  the  truth  of  the  charge.  The  firm  in 
question  assuredly  have  as  high  a  reputation 
as  any  commercial  firm ;  they  are  too  wealthy 
to  be  moved  by  temptation  to  so  petty  a 
fraud,  even  if  not  too  sagacious  to  incur  its 
risk;  moreover,  they  are  old-fashioned  New 
Yorkers  of  the  ante-Credit  Mobilier  times, 
when  the  general  habit  was  not  so  much  as 
now,  to  walk  near  the  perilous  edge  of  dis- 
honesty, and  the  young  members  of  the  firm 
have  not  been  bred  among  loose  notions  of 
morality ;  hence  the  improbability  that  such  a 
firm  would  knowingly  deprive  the  revenue  of 
a  dollar  is  so  great  that  nothing  short  of  the 
most  positive  and  unequivocal  evidence  can 
establish  the  fact  against  them.  Being  able 
to  lose  $271,000  without  weakening  thereby, 
if  their  case  so  directs  public  attention  to  the 
subject  of  the  tariff  as  to  effect  some  reform  in 
it,  the  firm  will  probably  not  count  their  expe- 
rience entirely  a  loss. 


[From  the  N.  Y.  Express,  April  22,  1878.] 

PHELPS,  DODGE  &  CO. 

We  notice  the  recent  carefully  prepared 
and  self-evidently  truthful  statement  of  the 
above  house,  as  to  their  innocence  of  any  in- 
tentional fraud  or  material  wrong  upon  the 
Treasury  of  the  United  States,  thiough  an 
under-valuation  of  dutiable  goods  imported  by 
them,  is  denied  over  the  signature  of  ex- 
Secretary  Boutwell,  late  of  the  Treasury.  The 
ex-Secretary  states,  as  evidence  of  the  ad- 
mitted guilt  of  the  house,  that  the  Treasury 


Department  never  compromises  with  parties 
claiming  to  be  innocent,  and  that  the  claim 
of  innocence  in  this  case  was  withdrawn  be- 
fore terms  of  settlement  would  be  entertained 
by  the  Treasury  Department.  This  the  ex- 
Secretary  gives  to  the  public  as  conclusive 
proof  of  the  falsity  of  the  statement  of  Messrs. 
Phelps,  Dodge  &  Company,  in  their  recently 
published  statement  of  the  affair. 

To  this  flimsy  record  we  wish  simply  to 
state  the  fact  that  in  all  cases  of  legal  or  ille- 
gal seizure  we  admit  that  the  Treasury  Depart- 
ment demand  such  terms  as  they  please,  one  of 
which  is  that  the  party  whose  goods  are  legally 
or  illegally  seized  shall  withdraw  all  claim  of 
innocence,  as  an  indispensable  pre-requisite  to 
any  negotiation  of  settlement  whatever.  This 
is  done  to  protect  United  States  officers  from 
individual  responsibility  for  damages,  to  which 
the  law  otherwise  would  make  them  amenable. 
The  withdrawal  of  all  claim  as  to  innocence  is 
to  protect  the  officers  of  the  Government, 
without  which  the  cases  would  be  postponed 
and  litigated  ad  infinitum,  to  the  great  annoy- 
ance and,  in  this  case,  incalculable  injury  of 
the  claimants.  The  same  rule  is  required  in 
many  of  the  other  departments  of  the  Govern- 
ment.    This  but  simply  adds  to  the  outrage. 

However  innocent,  the  claimants  must  first 
withdraw  all  claims  of  innocence,  upon  which 
future  suits  for  damages  could  be  based,  before 
the  Treasury  Department  will  entertain  any 
negotiations  for  settlement,  and  in  all  cases, 
whether  the  party  is  guilty  or  innocent.  Un- 
less this  arbitrary  and  illegal  demand  is  freely 
complied  with,  it  is  useless  to  think  of  secur- 
ing any  settlement,  however  extortionate  the 
demand  may  be.  In  this  case  the  ex-Secretary 
does  not  deny,  but  virtually  admits,  the  truth 
of  the  statement  by  the  firm  that  the  insigni- 
ficant sum  of  $2,000  or  $3,000  would  cover  the 
whole  claim  against  them,  even  upon  their 
own  showing,  yet  $271,000  was  demanded  and 
paid  to  avoid  the  loss  of  two  or  three  millions 
of  goods  arbitrarily  and,  as  they  show,  illegally 
seized;  and  because  this  old  and  responsible 
house  thought  proper  to  give  to  their  numer- 
ous friends  and  customers  a  plain  statement  of 
the  facts  of  this  illegal  seizure  and  wrong  upon 
them,  the  ex-Secretary  now  comes  out  with 
a  card,  not  to  deny  the  truth  of  the  claim 
made,  but  mislead  the  public,  and  set  up  the 
defence  in  behalf  of  the  Treasury  that  the  plea 
of  innocence  was  withdrawn  before  settlement 
was  made.  This,  we  repeat,  but  aflds  to  the 
injury,  and  we  feel  it  due  that  this  subterfuge 
should  be  exposed. 

******* 

In  all  our  reading,  excepting  in  the  single 
instance  of  the  ex-Secretary  of  the  Treasury, 
we  have  not  found  one  person  or  journal  to 


COMMENTS  ON  THE  REJOINDER. 


47 


defend  the  plunder  of  $271,<>()0  from  Phelps, 
Dodge  &  Co.,  most  of  wliich  has  gone  into  the 
hands  of  spies  and  informers. 


[From  the  N.  Y,  Tribune,  Ajn-il  22,  1878.] 
BOUTWELL  AND  DAVIS. 

Mr.  Boutwoll's  statement  of  the  case  of 
Phelps,  Dodge  &  Co.  calls  for  further  explana- 
tions from  somebody.  It  was  made  to  appear, 
in  the  narrative  published  by  the  firm  and  con- 
finned  l)y  the  letter  of  Judge  Noah  Davis,  that 
the  importers  had  been  innocently  betrayed 
into  a  technical  violation  of  the  Revenue  laws, 
and  that  the  Government  took  advantage  of 
their  mistake  to  wring  from  them  $271,«>00. 
The  inference  was  that  the  Secretary  of  the 
Treasury  was  unable  to  withstand  the  pressure 
of  the  informer  and  Customs  officers  entitled 
to  share  in  whatever  might  be  recovered,  and 
consented  to  a  ''compromise"  which  was  no 
better  than  extortion.  This  would  be  a  very 
serious  charge  to  make,  and  we  cannot  wonder 
that  Mr.  Boutwell  hastens  to  repel  the  impu- 
tion.  He  declares  that  "never,  while  Mr. 
Boutwell  was  at  the  head  of  the  Treasury  De- 
I)artment,  was  any  compromise  made  with 
persons  who  claimed  to  l)e  innocent,"  the 
Department  being  allowed  by  law  to  compro- 
mise with  offenders  only  after  guilt  is  admitted. 
For  this  reason,  Mr.  Boutwell  says  he  refused 
to  entertnin  the  propositi  made  on  behalf  of 
Phelps,  Dodge  &  Co.,  until  they  withdrew  the 
assertion  of  their  innocence.  He  does  not  gay 
that  he  compelled  them  to  confess  guilt;  but 
he  placed  them  in  the  position  of  tacitly 
acknowledging  a  fraud. 

But  Judge  Davis,  who  in  his  capacity  of 
United  States  District-Attorney  pa.ssed  uyion 
the  case  and  reported  it  to  the  Secretary  with  a 
recommendation  that  the  compromise  be  ac- 
cepted, writes  to  Messrs.  Phelps,  Dodge  &  Co. : 
"  If  I  had  come  to  the  conclusion  that  you  had 
acted  with  an  actual  design  to  defraud  the 
Government.  I  sliould  have  insisted  upon  the 
forfeiture  not  only  of  the  value  of  the  articles 
above  referred  to,  but  of  the  entire  invoices  of 
which  they  formed  a  part,  amounting  to  fully 
:^l,00(),()(>b ;  but  my  examination,  with  the  ex- 
planatit)ns  made  to  me  by  you,  showed  clearly, 
as  I  thought  and  still  think,  that  the  idea  of 
defrauding  the  Government  of  its  lawful  duties 
had  never  entered  your  mindly  Of  coui*se,  on 
Mr.  Boutwell's  theory,  the  Government  had  no 
right,  either  in  law  or  morals,  to  accept  the 
^271,000  if  the  case  was  as  Mr.  Davis  repre- 
sented it.  The  Secretary  moreover  had  no 
right  to  act  except  upon  the  District- Attorney's 


representations.  The  District-Attorney  would 
not  have  proposed  a  compromise  unless  the 
firm  had  satisfied  him  that  they  were  innocent ; 
the  Secretary  of  the  Treasury  would  not  hifve 
accepted  it  unless. they  had  confessed  them- 
selves to  be  guilty.  '  Which  is  right  ?  So 
far,  the  statement  of  the  Secretary  makes  the 
action  of  the  Government  more  odious  than 
ever ;  for  in  addition  to  the  wrong  of  sciueezing 
from  honorable  men  more  than  a  quarter  of  a 
million  of  dollars  for  a  technical  ofibnce,  wluch 
the  Government's  own  attorney  reports  to  have 
been  unintentional,  it  imposes  upon  these  un- 
fortunate merchants  the  cruel  necessity  of  con- 
structively owning  themselves  to  be  swindlers. 


THE  CASE  NOT  CHANGED. 


[From  The  Ikon  Auk,  April  24,  1878.] 

If  all  this  be  true,  we  fail  to  discover  that  it 
contradicts  in  any  important  particular  the 
statements  of  the  firm  of  Phelps,  Dodge  &  Co., 
published  in  our  last  issue.  Those  who  have 
availed  themselves  of  the  gracious  permission 
of  the  Trejwury  Department  to  carry  their 
cji.ses  to  the  courts,  have  derived  but  small  sat- 
isfiictiou  therefrom ;  and  while  it  would  have 
been  the  proper  course  for  the  firm  to  pursue, 
they  probably  concluded  that  the  cheapest  and 
wisest  thing  to  do  was  to  withdraw  their 
assertion  of  innocence  and  settle  the  claim  of 
the  Trem^ury  first.  The  letter  of  Judge  Davis 
very  fully  discusses  the  legal  aspects  of  the 
case,  and  on  that  the  firm  can  safely  rest  their 
disclaimer  of  fniudulent  intent,  whatever  may 
be  Mr.  Boutwell's  private  opinion  in  the  mat- 
ter. "  If,"  says  Judge  Davis,  "  I  had  come  to 
the  conclusion  that  you  had  acted  with  an 
actual  design  to  defraud  the  Government,  I 
should  have  insisted  upon  the  forfeiture  not 
only  of  the  value  of  the  articles  above  referred 
to,  but  of  the  entire  invoices  of  which  they 
formed  a  part,  amounting  to  fully  $l,oOO,0(M> ; 
but  my  examination,  with  the  explanations 
made  to  me  by  you,  showed  clearly,  as  I 
thought  and  still  think,  that  the  idea  of  de- 
frauding the  Government  of  its  lawful  duties 
had  never  entered  your  minds." 

In  the  light  which  this  statement  throws 
upon  the  official  opinion  of  the  prosecuting 
officer  of  the  Government,  it  is  difficult  to 
believe  that  the  firm  made  any  confession  of 
moral  guilt.  But  Mr.  Boutwell's  statement 
demands  an  explanation,  which  will  probably 
be  that  what  he  said  was  very  different  from 
what  he  is  reported  to  have  said. 


48 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


[From  TiiK  Etangklibt,  April  24,  1873.] 

As  we  have  condemned  severely  the  conduct 
of  Mr.  Houtwell  in  this  matter,  it  is  but  fair  to 
hear  what  he  has  to  say  in  his  defence.  A 
despatch  from  Washington  gives  the  following 
explanation : 

******* 

This  answer  is  far  from  being  satisfactory, 
for  it  is  not  sufficiently  explicit.  What  does 
Mr.  Boutwell  mean  by  talking  about  "  inno- 
cence" and  "guilt"?  That  this  firm  were 
technically  in  error,  and  therefore  legally 
liable,  they  do  not  deny ;  but  that  they  were 
morally  or  intentionally  "  guilty  "  of  any  wrong 
whatever,  they  do  deny  utterly  and  indig- 
nantly. If  Mr.  Boutwell  means  to  insinuate 
any  such  thing,  he  not  only  contradicts  timn, 
but  Judge  Davis  also,  who  as  District  Attorney 
of  the  United  States  had  charge  of  the  case, 
and  who,  after  a  full  investigation,  declares 
himself  fully  satisfied  that  "  the  idea  of  de- 
frauding the  Government  7iever  entered  their 
mindsy  Where  then  was  there  any  "  guilt  "  ? 
The  case  remains  as  before — that  the  Govern- 
ment took  advantage  of  a  technical  error  to 
inflict  an  enormous  penalty  on  a  commercial 
house  of  the  very  highest  standing  and  charac- 
ter. The  whole  thing  is  utterly  disgraceful. 
If  Mr.  Boutwell  has  no  better  explanation  than 
this  to  give,  he  had  better  keep  silence  and 
retire  from  public  observation,  knowing  that 
his  last  official  act  was  one  to  disgrace  himself 
and  his  country. 


OPINIONS  OF  OTHER  TREASURY 
OFFICIALS. 

[  Washington  Despatch  to  the  N.  Y.  IIebald,  April 
23, 1873.] 

The  Treasury  officers  are  not  unanimous, 
however,  in  sustaining  the  late  assertion  of 
ex-Secretary  Boutwell,  that  the  compromise 
itself,  which  the  firm  effected,  was  an  evidence 
of  guilt,  because  innocent  violations  of  the  law 
were  not  compromised  but  forgiven.  There 
are  those  in  the  Department  who  think  that 
Mr.  Boutwell  may  have  been  misled  into  ac- 
cepting forms  as  facts.  It  is  true  that  no 
compromise  can  be  affected  without  confession 
of  guilt ;  but  if  the  Congressional  investiga- 
tion, to  which  the  matter  is  likely  to  lead, 
should  be  had,  it  will  probably  appear  that 
such  confession  has  been  made  under  duress  in 
many  more  cases  than  one.  By  adroit  manipu- 
lation of  the  various  laws  applicable  to  the 
subject  the  swarm  of  Federal  officers  at  New 
York,  or  any  other  large  port,  are  able  to  work 
the  virtual  ruin  of  the  business  of  a  large  and 
reputable  house  by  arbitrary  seizure  of  books, 


papers  and  goods  in  store,  while  the  law's 
delays  intervene  to  prevent  the  recovery  of 
name  and  trade.  The  bare  knowledge  of  this 
ability  is  believed  to  be  sufficient  to  compel 
nine  out  of  every  ten  business  houses,  who  fall 
under  the  suspicion  of  the  officials,  to  settle  on 
the  best  terms  obtainable,  independent  of  the 
questions  of  guilt  and  proof  of  guilt.  The 
immediate  concern  of  the  Government  officers 
is  to  realize  immediately  upon  their  respective 
shares,  of  whatever  sum  is  exacted ;  hence  it 
is  necessary  to  obtain  a  pro  forma  admission 
of  culpability  as  a  condition  precedent  to  a 
waiver  by  the  accused  of  all  rights  of  action  for 
the  recovery  of  the  sum  paid  the  Government. 
In  case  of  hesitancy  to  confess  guilt  the  mere 
formality  of  the  transaction  is  first  pointed  out, 
and  that  failing,  the  terrors  of  the  arbitrary 
processes  of  seizure  and  detention,  and  those, 
but  preliminary  though  prolonged,  are  invoked 
and  seldom  in  vain.  The  whole  system  is 
known  at  the  Treasury  to  be  demoralizing,  as 
was  admitted  of  the  same  system  in  the  inter- 
nal revenue  service  before  its  abolishment. 
Its  practical  illustration  is  found  in  the  case  of 
Judge  Noah  Davis,  who,  as  United  States  Dis- 
trict Attorney,  was  stimulated  by  the  expecta- 
tion of  his  moiety  to  pursue  the  firm  of  Phelps, 
Dodge  &  Co.  till  the  compromise  money  was 
paid,  and  who  now,  upon  his  judicial  con- 
science, acquits  them  of  any  intentional,  and 
therefore  culpable  offences  against  the  revenue. 


[From  TuE   (^PMla.)  Public  Record,  April    25, 
1873.] 

THE  INVOICE  CASE  AGAIN. 

Technically,  Mr,  Boutwell  has  made  a  point 
against  the  reputation  of  Phelps,  Dodge  &  Co. ; 
but  practically  examined,  the  point  vanishes 
into  thin  air.  He  shows  that  this  firm,  in 
offering  to  pay  $271,000  by  way  of  compromise 
for  the  alleged  fraudulent  invoices,  asserted 
their  innocence  of  any  intent  to  cheat  the 
Government,  and  that  he  refused  the  offer 
until  this  assertion  should  be  withdrawn, 
whereupon  they  withdrew  it,  and  were  allowed 
to  settle  on  these  terms.  The  inference  sought 
to  be  conveyed,  of  course,  is  that  Phelps, 
Dodge  &  Co.  tacitly  admitted  their  guilt ;  and 
yet  nothing  can  be  more  disingenuous  than 
such  a  statement  of  the  case. 

The  simple  fact  is  that  in  all  instances 
where  it  is  sought  to  take  the  benefit  of  the 
act  allowing  compromises  to  be  made  in 
alleged  frauds  the  claim  of  innocence  must  be 
withdrawn.  Without  this  technical  process 
the  benefit  of  the  procedure  cannot  be  secured ; 
i  and  hence,  so  far  as  Phelps,  Dodge  &  Co.  are 


COMMENTS  ON  THE  REJOINDER. 


49 


concerned,  their  action  in  withdrawing  their 
first  indignant  protest  was  really  in  the  nature 
of  a  legal  or  technical  pleading,  which  is 
essential  to  an  arranged  form  of  settlement, 
hut  does  not  at  all  touch  the  real  issue  in- 
volved. Their  act  corresponds  to  the  many 
familiar  pleas  in  court,  or  legal  fictions,  which 
are  required  in  order  to  proceed  to  a  summary 
settlement ;  tliat  it  was  designed  to  operate  as 
an  actual  confession  of  guilt  is  a  preposterous 
inference. 

Again,  the  reason  why  the  law  requires  a 
claim  of  innocence  to  be  withdrawn  throws 
light  on  the  whole  transaction.  Its  original 
design  was  to  protect  the  United  States  offi- 
cials, witnesses  and  others,  from  subsequent 
legal  proceedings  brought  by  the  parties  ac- 
cused. These  officers  might  be  otherwise  pro- 
ceeded against  for  defamation  of  character, 
endeavor  to  injure  one's  business,  and  what 
not.  Hence,  the  Treasury  Department  has 
for  many  years  been  obliged  to  require  a  with- 


drawal of  any  claim  of  innocence  before 
abandoning  a  suit.  The  rule  subsisted  long 
before  Mr.  Boutwell's  day,  and  has  been  ap- 
plied in  many  cases.  Made  aware  of  this  rule, 
it  was  obviously  necessary  for  Phelps,  Dodge 
&  Co.,  whether  guilty  or  innocent,  to  comply 
with  these  requisitions,  in  order  to  arrive  at 
the  desired  end.  But  to  turn  this  purely  tech- 
nical and  arbitrary  point  upon  them  as  a 
moral  confession  of  guilt  on  their  part,  is 
wholly  unjust.  Yet  the  Government  has  been 
forced  to  resort  to  this  device,  in  order  to 
excuse  itself  for  its  conduct  in  taking  more 
than  a  quarter  of  million  dollars  out  of  a  firm 
whose  invoice  accounts  were  only  $2,300  less 
than  what  the  Government  conceived  it  ought 
to  pay.  A  Government  that  indulges  in  such 
practices,  and  defends  itself  in  such  a  way, 
may  well  expect  the  indignant  comments  of 
those  who  are  forced  to  transact  business 
with  it. 


THE  OFFICIAL  CORRESPONDENCE. 


THE  OFFICIAL  COERESPONDENCE. 


On  the  27th  of  April,  1873,  the  official  correspondence  in  relation  to  the  case 
of  Phelps,  Dodge  &  Co.,  from  the  files  of  the  Treasury  Department,  was  given 
to  the  public.  Some  of  the  leading  newspapers  found  room  to  print  the  volumi- 
nous and  intricate  mass  of  letters,  comprising  all  which  passed  between  the 
officials  at  Washington  and  the  revenue  agents,  attorneys,  etc.,  from  January  3, 
1873,  to  the  final  settlement  on  the  25th  of  the  ensuing  month.  They  commence 
with  the  report  of  the  Special  Agent,  Jayne,  and  cover  all  the  negotiations 
which  subsequently  ensued.  Letters  are  given  from  U.  S.  Attorney  Bliss,  who 
shows  that  the  full  amount  of  errors  discovered  on  $40,000,000  of  importations 
did  not  exceed  the  sum  of  $1664.68;  from  E.  C.  Banfield,  Solicitor  of  the 
Treasury ;  Secretary  Boutwell ;  Mr.  William  E.  Dodge,  and  the  Attorneys  of 
Phelps,  Dodge  &  Co.  These  documents  will  be  found  in  the  Appendix.  They 
received  the  careful  study  and  analysis  of  the  American  Press,  and,  as  will  be 
seen  by  the  following  utterances  from  newspapers  of  high  standing,  representing 
every  party  and  various  localities,  revealed  nothing  which  in  any  way  contra- 
dicts or  refutes  the  story  of  the  case  as  set  forth  in  the  Statement  of  the  Firm. 


COMMENTS  OF  THE  PRESS  UPON  THE  OFFICIAL 
CORRESPONDENCE. 


[From  TiiK  N.  Y.  TEinoB,  April  28,  18T8.] 

It  was  threatened  by  the  Treasury  Depart- 
ment that  the  correspondence  relating  to  the 
Phelps,  Dodge  &  Co.  compromise  should  be 
made  public  if  the  friends  of  the  firm  did  not 
keep  quiet.  They  did  not  mind  the  threat, 
apparently ;  and  the  correspondence  was  sent 
out  to  the  press.  From  the  letters  relating  to 
this  painful  affair,  which  we  print  herewith,  it 
will  be  seen  that  the  whole  story  has  been 
told  already.  There  is  Mr.  Special  Detective 
Jayne  hungrily  clamoring  for  the  forfeiture  of 
goods  valued  at  $1,750,000,  on  account  of  an 
alleged  deficiency  in  duties  paid,  amounting 
to  11,664.68,  according  to  the  United  States 
District- Attorney.  Then  there  are  the  duties 
claimed.  Then  there  are  the  various  propo- 
sals for  compromise  made  by  the  defendants. 
The  first  of  these,  as  we  already  knew,  was 
rejected  because  the  firm  reasserted  their  in- 
nocence in  making  it.  Xext  there  was  some 
higgling  as  to  the  amount  to  be  paid  and  the 


tei-ms  in  whicli  the  proposition  for  the  final 
settlement  was  to  be  worded.  Finally,  we 
have  the  acceptance  of  $271,017.23  by  the 
Government,  with  the  express  understanding 
that  the  compromise  covers  only  a  specified 
class  of  charges.  To  make  the  correspond- 
ence complete,  the  letter  of  ex- Attorney  Davis, 
who  had  originally  the  charge  of  these  cases, 
should  appear  again.  Mr.  Davis  wrote,  when 
he  had  examined  the  case,  that  the  thought 
of  defrauding  the  United  States  Government 
had  never  entered  the  minds  of  Phelps,  Dodge 
&  Co.  The  correspondence  does  not  show 
that  Secretary  Boutwell  had  any  opinion  dif- 
fering from  Mr.  Davis's.  It  does  show  that 
the  Secretary  would  not  discontinue  the  suit 
for  !?  1,000,000  until  the  firm  had  withdrawn 
their  protest  of  innocence  and  had  further 
conformed  to  the  demands  made  upon  them 
for  money.  The  threatened  '*  exposure  "  of 
the  Treasury  Department  hurts  nobody  but 
its  own  subordinates. 


64 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


[Frorn  the  same  Newspaper,  Aj^il  29,  1873.] 


THE 


TREASURY  AND 
CHANTS. 


THE     MER- 


Tlie  Treasury  Department  has.  not  mend- 
ed its  case  by  the  publication  of  its  corres- 
pondence in  the  matter  of  Pheips,  Dodge  & 
Co.  These  documents  throw  no  light  upon 
the  violations  of  the  revenue  laws  for  which 
the  firm  has  been  mulcted.  They  make  no 
sensational  disclosures.  They  discredit 
none  of  the  statements  which  the  merchants 
have  published  in  their  own  defense.  We 
have  lirst  the  report  of  special  agent  Jayne, 
reciting  the  discovery  of  discrepancies  in 
the  invoices,  and  commenting  with  much 
impertinent  virtue  upon  the  wickedness  of 
frauds  against  the  revenue.  Then  comes 
the  formal  correspondence  between  Mr, 
George  Bliss,  jr.,  and  Solicitor  Banfield,  on 
the  one  hand,  and  the  attorneys  of  Messrs. 
Phel|)S,  Dodge  &  Co.  on  the  other,  respect- 
ing the  otFer  to  compromise.  That  is  all. 
There  is  no  confession  of  guilt.  There  is 
nothing,  except  Mr.  Jayne's  report,  to  show 
any  intention  to  defraud — and  when  Mr. 
Hand  cuft' Jayne  goes  after  an  importer,  his 
zeal,  as  wc  all  know,  is  not  invariably  tem- 
pered with  discretion.  Of  course  the  Treas- 
ury Department  does  not  publish  Messrs. 
Phelps,  Dodge  &  Co.'s  explanation  of  the 
discrepancies;  neither  does  it  publish  the 
letter  of  ex-District  Attorney  Davis,  who  de- 
clares that  an  examination  of  the  whole 
case,  in  the  light  of  their  explanations,  con- 
vinced him  that  "the  idea  of  defrauding 
the  Government  of  its  lawful  duties  had 
never  entered  their  minds."  The  papers 
now  given  to  the  public  show,  however,  that 
Mr.  George  Bliss,  jr.,  who  succeeded  Judge 
Davis  as  District  Attorney,  recommended 
the  Treasury  to  compromise  the  claim,  on 
the  ground  that  the  Government  would  not 
get  what  it  demanded  if  the  case  went  into 
court.  "  I  am  influenced  to  this  course," 
he  says,  "  by  the  fact  that  the  nominal 
amount  claimed  is  so  enormous  in  compari- 
son with  the  amount  of  undervaluation  and 
fraud,  that  I  believe  it  would  be  exceed- 
ingly difficult  to  obtain  a  verdict  for  the 
amount  claimed."  Mr.  Bliss,  in  fact,  ad- 
vised the  Secretary  to  take  $271,000  because 
he  did  not  believe  he  could  get  any  more. 
Judge  Davis  recommended  it  because  he 
was  satisfied  of  the  innocent  intent,  and  did 
not  believe  a  forfeiture  of  the  whole  amount 
■was  deserved.  But  if  there  was  no  guilty 
intent,  the  Government  had  no  moral  right 
to  exact  a  penny  above  the  actual  deficiency 
of  duties.  The  statutes  empower  the  Sec- 
retary of  the  Treasury  *'  to  mitigate  or  remit 


such  fine,  forfeiture,  or  penalty,  or  remove 
such  disability,  or  any  part  thereof,  if  in 
his  opinion  the  same  shall  have  been  in- 
curred without  willful  negligence,  or  any 
intention  of  fraud  in  the  person  or  persons 
incurring  the  same."  The  oflicer  upon 
whose  representations  the  Secretary  of  the 
Treasury  is  expected  chiefly  to  rely  is  the 
District  Attorney.  The  District  Attorney, 
however,  was  interested  in  forcing  a  com- 
promise, because  he  was  entitled  to  two  per 
cent,  of  the  gross  amount  recovered.  The 
chief  officers  of  the  Custom-house — the  col- 
lector, surveyor,  and  naval  officer — heartily 
co-operated  with  him,  because  they  were 
jointly  to  receive  one  quarter  of  the  re- 
mainder. 

In  this  blackmailing  operation  the  Gov- 
ernment officials  stand  in  a  hardly  more 
agreeable  light  than  the  spy  who  set  the 
proceedings  on  foot.  The  "  com.promise  " 
looks  like  nothing  but  a  scheme  to  extort 
money,  and  the  firm  made  a  terrible  blun- 
der in  submitting  to  it.  Their  course,  how- 
ever, is  not  incomprehensible.  Probably 
they  had  good  reason  to  dread  any  further 
quarrel  with  the  Custom-house.  Threat- 
ened with  a  vexatious  prosecution,  seizure 
of  their  books,  interruption  of  their  busi- 
ness, and  injury  to  their  credit,  they  went 
before  the  Secretary  of  the  Treasury  in  the 
attitude  of  criminals  suing  for  mercy,  paid 
the  quarter  of  a  million,  and  were  told  to 
go  home  thankful  that  they  had  not  been 
robbed  of  three-quarters  of  a  million  more. 

Long  before  the  political  campaign  of 
1872  we  denounced  the  frauds  and  injustice 
that  flourish  in  our  Custom-house  under  the 
system  which  makes  the  collection  of  the 
revenue  a  scheme  for  rewarding  political 
followers  and  pushing  partisan  advantages. 
The  Patterson  investigation  in  1871  brought 
to  light  an  extent  of  dishonesty  among  the 
oflBcials,  and  oppression  of  the  merchants, 
far  beyond  the  current  suspicions.  A  sec- 
ond investigation,  in  1872,  revealed  greater 
abuses  than  ever,  especially  in  the  extor- 
tionate charges  levied  upon  commerce,  the 
license  granted  to  spies  and  informers,  and 
injustice  towards  reputable  merchants  ;  but 
the  Administration  took  no  notice  of  the 
disclosures  because  it  had  no  desire  for  re- 
form. One  of  the  most  important  witnesses 
before  the  Patterson  committee  was  Mr. 
William  E.  Dodge,  who  testified  emphati- 
cally that,  owing  to  the  extortions  of  Gen- 
eral Order  store-keepers,  and  the  various 
persons  connected  with  the  Custom-house, 
New  York  had  become  the  most  expensive 
port  in  the  whole  world.  His  evidence  was 
considered  extremely  damaging,  and  has 


COMMENTS  ON  THE  OFFICIAL  CORRESPONDENCE. 


55 


often  been  referred  to  in  subsequent  dis- 
cussions. Tlie  names  of  Phelps,  Dodge  & 
Co.  also  headed  an  unavailing  petition  for 
the  redress  of  certain  grievances,  signed  by 
one  hundred  New  York  merchants,  and 
jjresented  to  Collector  Murphy.  Neverthe- 
less, Mr.  Dodge  was  unwise  enough  during 
the  late  campaign  to  give  his  influence  for 
the  continuance  of  the  evils  of  which  he 
had  complained.  He  believed,  we  suppose, 
that  the  Washington  authorities  were  really 
anxious  that  the  management  of  the  Cus- 
tom-house should  be  just.  We  should  like 
to  know  what  Mr.  Dodge  thinks  about  it 
now. 

For  Mr.  Dodge's  fidelity  during  the  can- 
vass has  apparently  not  wiped  out  the  re- 
membrance of  his  testimony  during  the 
investigation.  We  should  be  sorry  to  say 
that  he  has  been  j)ersecuted  for  telling  the 
truth  ;  but  we  do  believe  that  if  he  had  not 
<»flV*nded  tlie  Custom-house  in  1871  he  would 
have  been  less  likely  to  sufler  from  the  out- 
rage which  has  just  been  inflicted  on  his 
firm.  It  is  not  often  that  the  great  New 
York  organization  of  corruption  and  oppres- 
sion has  so  tempting  an  opjwrtunity  at 
once  to  seize  a  rich  siK)il,  and  to  revenge 
itself  upon  a  witness  who  has  exi)osed  its 
abuses.  While  the  Custom-house  is  con- 
tn)lled  by  professional  party  hacks,  we  may 
exi)ect  itto  befilledwith  extortioners.  While 
it  is  managed  for  partisan  purposes,  we 
may  expect  it  to  be  used  as  an  instrument 
for  enriching  party  friends,  punishing  party 
foes,  and  awing  those  who  know  too  much 
into  silence.  There  is  no  firm  in  New  York 
which  docs  not  run  the  same  danger  which 
Phelps,  Dodge  &  Co.  incurred.  Any  ini- 
l>orter  who  complains  of  extravagant  im- 
l)osts  upon  commerce,  or  exposes  corruption 
and  mismanagement,  may  have  his  papers 
seized  by  a  Custom-house  agent,  and  his 
business  overhauled  for  any  number  of 
years.  Under  our  complex  system  of  valu- 
ations it  will  go  hard  if  some  apparent 
irregularity  cannot  bo  discovered,  and  in 
any  case  the  inconveniences  and  disgrace 
of  the  seizure  must  entail  serious  loss. 

We  leave  this  case  to  the  consideration 
of  the  mercantile  community — only  remind- 
ing them  that  if  they  want  to  save  them- 
selves from  the  fate  of  Mr.  William  E. 
Dodge  they  must  reform  the  Custom-house 
from  roof  to  cellar;  and  if  they  want  to 
reform  the  Custom-house  they  must  begin 
at  Washington. 


[From  the  N.  Y.  Evening  Post,  April  28,  1873.] 

A  QUESTION  OF  VERACITY  AND 
CHARACTER. 

There  is  a  question  of  veracity  between 
Messrs.  Phelps,  Dodge  &  Co.  and  Mr.  B. 
G.  Jayne,  "  special  agent."  Messrs.  Phelps, 
Dodge  &  Co.,  even  Mr.  Jayne  condescends  to 
acknowledge,  is  a  "  house  of  wealth  and 
standing."  Other  importers  are  "  an  ordi- 
nary brood,"  but  Phelps,  Dodge  &  Co.  are 
alxjve  the  influences  under  which  the 
"brood"  is  8upix)sed  by  Mr.  Jayne  to  do 
business. 

On  the  other  hand,  Mr.  B.  Q.  Jayne,  as 
the  special  agent  of  the  Treasury  l)«'i)art- 
ment,  is  simply  a  detective.  An  informer, 
a  spy,  a  discharged  clerk,  anybody  who  has, 
or  thinks  he  has,  any  sort  of  infonnation 
against  any  of  the  "  ordinary  brood  of  im- 
porters "  by  which  they  can  bring  against 
such  persons  a  charge  of  either  actual  or 
constructive  fraud,  goes  at  once  to  Mr. 
Jayne.  Mr.  Jayne  is  the  receiver  of  all 
such  charges  from  all  such  persons ;  he  is 
the — so  to  speak  — "  uncle  "  of  that  class  of 
gentlemen  who  thrive  by  secretly  stealing 
into  the  counting-houses  and  account-lxM)k8 
of  the  "  brood  "  and  robbing  them — not  in- 
deed of  the  contents  of  their  money- 
drawers,  but — of  their  good  names,  or  com- 
l)elling  them  to  submit  to  be  enormously 
black-mailed  according  to  the  act  made  and 
provided. 

Mr.  Jayne  as  "  special  agent "  gets  his 
legal  share  of  whatever  sum  the  particular 
member  of  the  "  brood  "  who  may  be  caught 
may  be  compelled  to  pay.  But  that,  it  is 
supposed,  is  not  all  of  Mr.  Jayne's  profit,  as 
he  is  an  expert  in  the  matter  of  Revenue 
laws.  He  knows  just  where  the  trai)8  and 
snares  and  tangles  are.  He  can  wind  the 
meshes  of  the  law  so  tightly  and  so  deftly 
around  one  of  the  "  brood  "  that  his  escape 
is  hopeless.  So  clever  and  so  skilful  is  he, 
that  the  miserable  spy  and  informer  is  per- 
fectly helpless  witliout  the  *'  special  agent." 
The  half- forfeit  of  whatever  sum  is  to  be 
squeezed  out  of  the  importer  the  spy  can- 
not touch  without  Mr.  Jayne's  aid.  He 
may  listen  at  keyholes  ;  he  may  bribe  por- 
ters to  let  him  into  counting-houses  at 
night ;  he  may  secretly  copy  invoice-books 
or  steal  memoranda ;  or  he  may  gather,  at 
whatever  pains,  the  information  which  is 
to  entangle  the  unfortunate  merchant  in 
the  snares  and  pitfalls  of  obscure  laws ;  his 
labor  is  all  in  vain  without  Mr.  Jayne.  He 
and  Mr.  Jayne  must  agree  that  there  is  a 
case,  and  if  the  Treasury  agent  "  can't  sec 


56 


THE  CASE  OF  PEIELPS,  DODGE  &  CO. 


it,"  the  spy  may  go  his  ways.  The  poor 
wretch  who  betrayed  the  confidence  of 
Phelps,  Dodge  &  Co.,  who  picked  out  here 
and  there  an  item,  stole  here  and  there  a 
memorandum,  who  wove  out  of  these  slen- 
der materials  a  grave  offence  against  the 
law  in  that  house,  carried  his  bundle  to 
Mr.  Jayne's  "  spout."  Mr.  Jayne  could  tell 
him  whether  there  was  any  thing  in  it  or 
not  worth  having,  for  that  is  Mr.  Jayne's 
official  business. 

And  now  comes  up  between  Mr.  Jayne 
and  Phelps,  Dodge  &  Co.  this  question  of 
veracity:  Messrs.  Phelps,  Dodge  &  Co.'s 
statement  we  have  already  heard.  They 
assert  they  meant  no  fraud  in  the  particu- 
lar items  involved  in  the  charges  against 
them ;  they  meant,  where  they  were  really 
at  a  loss  as  to  the  cost  of  certain  goods,  to 
get  as  near  as  possible  to  it.  The  Liver- 
pool consul  sustains  them  in  this  assertion. 
Judge  Noah  Davis,  then  District  Attorney, 
asserts  that  it  was  evident  to  him,  from  the 
outset,  that  this  was  true,  and  he  backed 
up  that  opinion  by  refusing  to  accept  a 
cent  of  the  enormous  sum  exacted ;  Mr. 
Bliss,  the  present  District  Attorney,  said  that 
in  these  invoices,  the  total  value  of  which 
was  $1,726,000,  and  the  items  on  which  the 
undervaluation  occurred  $271,017.63,  the 
actual  loss  to  the  Government  was  only 
f  1,664.68 !  But  now  comes  Mr.  Jayne,  and 
says  that,  "  in  fact,  they  (Phelps,  Dodge  & 
Co.)  have  done  business  in  New  York,  know- 
ing and  caring  nothing  for  the  laws,  or  they 
have  deliberately  and  systematically  disre- 
garded and  deified  the  laws  with  intent  to 
defraud  the  Government." 

Here  is  the  issue  made  up.  It  is  between 
Mr.  Jayne,  the  special  agent  with  an  ex- 
pectant percentage,  and  Messrs.  Phelps, 
Dodge  &  Co.,  who  he  asserts  have  deliber- 
ately and  systematically  disregarded  the 
laws  with  intent  to  defraud  the  Government 
of  sixteen  hundred  dollars.  We  think  the 
case  may  be  safely  left  j  ust  there. 

Meanwhile,  what  have  "the  ordinary 
brood  of  importers  "  to  say  about  the  laws 
that  put  them  in  the  power  of  Mr.  Jayne 
and  those  estimable  and  respectable  gentle- 
men who  supply  him.  with  information? 


[From  the  N.  Y.  Express,  April  29, 1873.  ] 

THE  CASE   OF  MESSRS.  PHELPS, 
DODGE  &  CO. 

From  the  bold  statement  of  ex-Secretary 
Boutwell,  telegraphed  to  the  press  through- 
out the  country  about  a  week  since,  to  the 


effect  that  the  above  firm  had  withdrawn 
all  claim  of  alleged  innocence  of  intended 
fraud  upon  the  Treasury  before  the  Treas- 
ury Department  would  entertain  any  pro- 
])Osed  terms  of  compromise,  on  the  ground 
that  the  Government  did  not  settle  with 
any  one  until  the  question  of  guilt  was  es- 
tablished, the  public  was  led  to  expect  seri- 
ous and  damaging  revelations  when  the 
quasi  official  threat  was  made  that  the  cor- 
respondence and  facts  in  the  case  would  be 
given  in  refutation  of  the  statement  of 
Messrs.  Phelps,  Dodge  &  Co.,  establishing 
the  groundlessness  of  the  demand  made 
upon  them. 

Preparatory  prejudicial  comments  ap- 
peared in  a  large  number  of  journals,  seri- 
ously reflecting  upon  the  honor  and  integ- 
rity of  the  house  in  question,  so  much  so 
that  public  expectation  was  greatly  excited 
to  see  the  promised  exposures  that  should 
demolish  the  claimed  innocence  and  good 
name  of  the  house  in  question. 

Well,  the  statement  of  the  Government 
officials  is  out,  and  the  most  casual  reader 
will  exclaim,  "the  mountain  has  labored 
and  brought  forth  a  mouse." 

Not  one  word  of  admission  of  guilt  or  re- 
traction of  innocence  appears,  as  alleged. 
Possibly  a  technical  trifling  undervaluation 
or  violation  of  the  law  might  be  alleged, 
but  certainly  not  sufficient  to  make  a  case 
upon  which  a  verdict  could  be  found.  No 
wonder  the  officials  one  day  claimed  a 
strong  case,  and  the  next  as  strongly  urged 
acceptance  of  the  first  offer  made,  well 
knowing  no  verdict  could  be  expected  upon 
the  facts  if  left  to  a  jury. 

The  offer  of  settlement  was  made  to  be 
relieved  from  annoyance,  get  possession  of 
their  books  and  property,  and  to  prevent 
further  newspaper  misrepresentation.  The 
facts  demonstrated  that  nearly  or  quite 
every  dollar  paid  should  be  refunded,  as  a 
matter  of  justice  and  equity  between  man 
and  man.  The  case  proves  to  be  a  success- 
ful effort  to  defraud  Phelps,  Dodge  &  Co., 
through  a  forced  construction,  with  the  aid 
of  an  informer,  out  of  goods  to  the  value 
of  $271,000. 


[From  The  Nation,  May  1,  1873.] 

The  Treasury  Department  has,  in  self- 
defence,  published  the  correspondence  re- 
lating to  the  Phelps-Dodge  affair.  There  is 
nothing  new  in  it,  except  the  report  of  the 
detective  or  "  si)ecial  agent,"  as  he  is  called, 
Mr.  Jayne,  and  that  of  District  Attorney 


COMMENTS  ON  THE  OFFICIAL  CORRESPONDENCE. 


57 


Bliss.  Mr.  Jayne's  letter  is  hi<^hly  rhetori- 
cal, amuHingly  so  when  one  remembers  that 
his  share  of  the  sum  extracted  from  tlie 
Dodges  is  $22,5^3,  which  is  very  good  pay 
in  these  times  for  one  little  job.  In  his 
eagerness  and  excitement  over  the  prospect, 
lie  in  one  place  indulges  in  a  climax  which 
ought  to  find  a  jilace  in  the  "  School  Head- 
ers." lie  says  he  discovered  in  the  }K)Sse8- 
sion  of  the  linn  "certain  ijapers.ijurporting 
to  be  co])ies  of  invoices  from  the  manufac- 
turers of  the  goods,"  which  diftered  from 
the  invoices  filed  with  the  Custom-house,  in 
regard  to  the  prices  paid,  from  threepence 
to  four  shillings  peri)ackage  ;  "in  omitting 
in  many  cases  the  additional  charge  per 
l)ackage  from  the  Custom-house  invoice  ; " 
and  "  in  omitting  from  the  Custom-house  or 
Consular  invoice  the  cost  of  transi)ortiition 
from  Wales,  the  jdacc  of  delivery,  to  Liv- 
erpool, the  X)lace  of  shipment."  If,  he 
says,  the  same  violations  of  law  were  prac- 
ticed by  the  finn  in  all  their  im|K)rtations, 
the  loss  to  the  Government  would  be  about 
.^15,000  a  year.  The  loss  which  has  been 
])roved,  however,  is  all  told  only  |;3000,  and 
this,  Mr.  Davis  says,  was  more  than  cov- 
ered by  the  losses  of  tlie  Dodges  to  the 
(Jovernment  under  their  own  rule.  Mr. 
Davis,  who  was  District  Attorney  when  the 
l)roceedings  began,  declared  his  belief  that 
no  fraud  was  intended,  in  this  differing 
from  the  worthy  Jayne,  who  liad  no  more 
doubt  about  the  guilty  intent  than  about 
his  own  existence. 

*  *  *  iff.  4c3|c>|c« 

But  Mr.  Davis  went  on  the  bench  at  an 
early  stage  in  the  proceedings,  and  was 
succeeded  by  Mr.  George  Bliss,  whose  share 
in  the  prize  is  also  $22,583.  He  simply  re- 
peats the  facts  as  they  ai)pear  in  evidence, 
expresses  his  belief  in  the  frauds,  but  not 
with  any  great  earnestness,  and  announces 
that  the  amount  legally  forfeited  is 
$1,726,000,  but  he  advises  the  Secretary 
not  to  go  before  the  court  with  his  claim, 
"  inasmuch  as  he  believed  it  would  be  ex- 
ceedingly difficult  to  obtain  a  verdict  for 
the  amount  claimed,"  it  being  "so  enor- 
mous in  comparison  with  the  undervalua- 
tion and  fraud."  The  total  amount  of  du- 
ties lost  to  the  Government  is,  he  says, 
$1,664.68 ;  so,  like  a  prudent  man,  he  urges 
the  acceptance  of  the  offer  made  by  the 
Dodges  to  compromise  for  $271,017.23. 
The  anxiety  of  Jayne  lest  this  offer  should 
be  refused,  and  he  thus  lose  his  money,  is 
very  comical.  He  urges  its  acceptance  for 
three  reasons,  which  he  gives  seriatim  with 
great  naivete  :  (1)  because  "  the  sum  would 
more  than  reimburse  the  Government " — 


of  course  it  did,  and  left  a  small  fortune  to 
the  informer,  and  to  Messrs.  Bliss,  Jayne, 
Arthur,  and  Sharpe  besides);  (2)  because 
"  the  firm  is  composed  of  a  large  number 
of  jjartners,  and  the  unceilainty  of  human 
affairs,  taken  in  connection  with  the  un 
avoidable  delays  of  the  law,  is  a  strong  ar- 
gument in  favor  of  acceptance  " — (a  some- 
what cloudy  8tat(ment,  but  meaning  ap- 
j)arently  that  Mr.  Jayne  takes  a  sombre 
view  of  the  future,  and  hates  litigation, 
and  likes  cash  pajnnents) ;  and  (3)  "  because 
the  intent  of  the  law  would  thus  be  ful- 
filh'd."  In  short,  lie  wanted  the  thing  set- 
tled up,  first  because  it  was  profitable,  and 
next  because  it  was  right.  The  compro- 
mise was  finally  made,  and  $271,017.2? 
paid  over  by  the  Dmlges.  Of  this  the  Gov 
ernment  gets  one-half,  the  knavish  clerk 
who  acted  as  informer,  and  who  ought 
to  be  in  the  penitentiary,  actually  gets 
$67,754.31,  and  the  rest  is  divided  between 
the  District  Attorney  and  the  leading  Cus- 
tom-house officials.  What  a  business  for  a 
civilized  and  Christian  Government  to  be 
engaged  in ! 


[From  the  Bbookltk  Union,  April  29,  1878.] 
THE  STATEMENT  OF  THE  FIRM  UN- 
SHAKEN. 

No  one  who  has  carefully  read  the  state- 
ment of  Phelps,  Dodge  &  Co.  in  regard  to 
their  revenue  difficulties  with  the  Govern- 
ment, sustained  in  its  material  points  by 
the  letter  of  J  udge  Noah  Davis,  appended 
thereto,  can  well  come  to  any  other  conclu- 
sion than  that  a  gross  outrage  was  perpe- 
trated upon  this  firm  by  the  Government 
officials,  who  squeezed  two  hundred  and 
seventy-one  thousand  dollars  out  of  them 
as  a  penal  forfeiture.  The  correspondence 
in  regard  to  the  matter  sent  to  the  press  by 
the  Treasury  Department,  and  yesterday 
published  in  the  New  York  papers,  fur- 
nishes no  reason  for  changing  this  opinion. 
It  simply  proves — what  Phelps,  Dodge  & 
Co.  do  not  deny — that  the  finn  had  been 
guilty  of  a  technical  \iolation  of  our  Reve- 
nue laws.  The  manner  in  which  this  oc- 
curred, and  the  circumstances  thereof,  they 
fully  explained  to  the  Government  officials  ; 
and  this  ought  to  have  been  satisfactory 
without  the  payment  of  a  dollar  by  way  of 
penal  forfeiture.* 

The  law  of  1863,  under  which  these  pro- 
ceedings were  commenced,  aims  its  penalty, 
not  at  mistakes,  or  mere  irregularities,  or 
technical  violations  without  the  puipose  of 


58 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


fraud,  but  at  intentional  eflforts  to  cheat  the 
Government  out  of  its  lawful  duties.  It 
declares  that — 

"  If  any  owner,  consignee,  or  agent  of  any 
goods,  etc.,  shall  knowingly  make  or  at- 
tempt to  make  an  entry  thereof  by  means 
of  any  false  invoice  or  false  certificate  of 
a  consul,  etc.,  or  of  any  invoice  which  shall 
not  contain  a  true  statement  of  all  the  par- 
ticulars hereinbefore  required,  or  by  means 
of  any  other  false  or  fraudulent  document 
or  paper,  or  of  any  other  false  or  fraudu- 
lent practice  or  appliance  whatsoever,  said 
goods,  etc.,  or  their  value  shall  be  forfeited, 
etc." 

This  law,  upon  its  very  face,  supposes 
guilty  knowledge,  fraudulent  intention  as 
the  basis  of  fraudulent  practice,  as  the  in- 
dispensable element  of  the  offence  which  it 
proposes  to  punish.  Any  violation  which 
lacks  this  feature  lacks  the  quality  which 
the  statute  specifies,  and  against  which 
aims  its  penalty.  The  statement  of  Phelps, 
Dodge  &  Co.,  not  contradicted  in  a  single 
fact  by  the  published  correspondence,  and 
confirmed  by  the  letter  of  Judge  Davis, 
clearly  shows  that  their  "  irregularities,"  or 
so-called  violations  of  law,  were  not  tainted 
at  all  with  the  fraudulent  purpose. 
******** 

This  is  what  Judge  Davis  thought  when 
he  was  District  Attorney,  and  what  he  said 
if  he  did  his  duty  at  the  time.  We  have 
no  wish  to  deal  unjustly  by  the  Govern- 
ment officials  concerned  in  this  business  ;  yet 
the  facts  compel  us  to  denounce  their  ac- 
tion as  an  outrage  under  the  very  thinnest 
kind  of  legal  covering.  The  merchants  of 
New  York  ought  to  hold  a  public  meeting, 
and  take  measures  to  prevent  the  repetition 
of  such  outrages.  The  next  Congress  will 
have  an  ample  occasion  for  an  investigating 
committee.  It  ought  so  to  simplify  our 
customs  revenue  laws  that  importers  can 
understand  them. 


[From  tJve  Boston  Post,  May  1,  1873.] 

Tlie  settlement  of  the  allegations  brought 
against  Phelps,  Dodge  &  Co.  by  the  Treas- 
ury Department  by  no  means  constitutes  a 
final  disposal  of  the  case,  and  all  cognate 
cases,  as  between  the  people  and  the  Gov- 
ernment. The  very  jiffet  and  searching 
comments  of  a  correspondent  on  the  sub- 
ject will  be  perused  with  increased  interest 
in  another  column.  The  writer  maintains 
that  the  inculpated  firm  at  no  time  recalled  I 


their  deliberate  assertions  of  innocent  in- 
tent which  were  contained  in  their  first 
offer  of  compromise ;  that  neither  the  in- 
former nor  the  District  Attorney  rested  their 
advice  or  action  on  any  charge  of  fraudulent 
motive;  and  that  Mr.  Boutwell  finally  accei)t- 
ed  their  offer  of  compromise  without  either 
requiring  the  recall  of  this  asseveration  of 
theirs,  or  charging  them  with  that  guilt 
which  he  now  insists  was  the  only  permis- 
sible basis  of  his  final  action  in  settlement. 
Thus  the  firm  stand  as  free  from  every  im- 
putation of  dishonest  intention  as  ever.  It 
certainly  is  not  discoverable  anywhere  in  the 
halting  and  badgering  terms  insisted  on  by 
Mr.  Boutwell.  The  Tribune  brings  forward 
a  theory  of  motive,  however,  which  the  Gov- 
ernment may  not  be  so  ready  to  meet  on  its 
merits.  It  hints  of  the  truth-telling  pro- 
pensity of  Mr.  Dodge  during  the  memora- 
ble Custom-house  investigation  of  1871,  and 
of  this  present  persecution  being  the  sequel 
of  it.  It  does  not  hesitate  to  assert,  in  fact, 
that  but  for  the  offence  he  gave  the  Ad- 
ministration at  that  time,  and  for  which 
even  "  his  fidelity  during  the  canvass  "  failed 
to  compensate,  "  he  would  have  been  less 
likely  to  suffer  from  the  outrage  which  has 
just  been  inflicted  on  his  firm."  It  is  no 
stretch  of  credulity  whatever  to  believe  it. 


[From  th£  same  Newspaper,  April  30, 1873.1 

PHELPS,  DODGE  &  CO. 
If  the  several  letters  that  passed  between 
Messrs.  Phelps,  Dodge  &  Co.  and  the  Treas- 
ury ofl&cers,  all  of  which  appeared  in  yes- 
terday's Post,  are  capable  of  yielding  any 
special  satisfaction  to  the  mercantile  com- 
munity, whether  in  reference  to  the  system 
of  collecting  the  customs,  or  the  confused 
ideas  of  justice  and  honesty  that  are  made 
so  apparent,  the  mercantile  mind  must 
have  become  mysteriously  charmed  with 
what  it  once  woiild  have  rejected  with  dis- 
gust and  indignation.  The  correspondence 
establishes  nothing  clearly,  but  leaves 
everything  still  more  in  a  muddle.  But  one 
point  is  made  plain,  that  a  compromise  was 
finaUy  effected  for  the  sum  of  $271,017.23, 
which  the  Government  agent,  or  informer, 
assured  the  Secretary  of  the  Treasury  would 
"  more  than  reimburse  the  Government  for 
any  probable  loss,"  and  with  the  guaran- 
teed share  of  which  he  shows  that  lie  had 
every  personal  reason  to  be  satisfied.  The 
case  appears  to  have  hinged  entirely  upon 
the  pleasure  of  this  informer.  Proi)ositions 
for  a  compromise  were  made  and  with- 


COMMENTS  ON  THE  OFFICIAL  CORRESPONDENCE. 


59 


drawn  only  as  tliey  seemed  to  suit  him. 
Tlie  Treasury  was  secure  in  any  event. 
The  total  amount  of  the  under\-al nation  is 
less  than  seven  thousand  dollars ;  it  is 
the  gross  value  of  the  tainted  items  in 
the  various  invoices  that  comes  up  to  the 
figures  of  the  accepted  compromise,  which 
were  quite  large  enough  to  satisfy  the  ra- 
pacity of  any  Government  informer  and 
spy.  The  District  Attorney,  whose  duty  it 
was  to  prosecute  the  case,  acknowledged  to 
the  Solicitor  of  the  Treasury  that  the  firm's 
books  showed  no  evidence  of  fraud,  the 
wliole  of  that  charge  of  the  informer  being 
confined  to  certain  memoranda  accompany- 
ing the  inculpated  invoices. 


[From  The  Chicago  Tribunk,  May  1,  1873.1 

THE  CASE  OF  PHELPS,  DODGE  &  CO. 

We  publish  this  morning  the  official 
statement  of  the  much-talked-of  case  of 
Phelps,  Dodge  &  Co. 

Upon  a  review  of  all  the  facts,  it  is  not 
possible  to  conclude  that  there  was  any  in- 
tentional crime  committed  by  this  firm. 
The  amount  of  duties  they  avoided  by  the 
enormous  vouchers  does  not  amount  alto- 
gether to  a  sum  sufficient  to  induce  any 
sensible  man  to  commit  such  an  offence. 
Upon  the  whole  amount  of  their  importa- 
tions in  a  year,  the  amount  thus  saved  is 
absolutely  insignificant.  It  would  not  pay 
the  cost  of  the  machinery  necessary  to  carry 
out  such  a  fraud.  Technically,  and,  there- 
fore, legally,  they  defrauded  the  revenue  ; 
but  there  is  nothing  in  the  facts  to  warrant 
the  judgment  that  the  fraud  was  systemat- 
ic, deliberate,  or  that  the  firm  had  any 
knowledge  that  the  law  was  violated.  The 
case,  however,  shows  the  necessity  of 
sweeping  away  from  trade  and  commerce 
these  pitfalls  and  snares  which  the  Tariff' 
law  has  prepared  to  catch  and  destroy 
everybody  who  buys  or  deals  in  imported 
goods. 


THE  TREASURY  "HOIST  WITH  ITS 
OWN  PETARD." 

[From  The  Tarrytown  Argus,  May  3,  1873.] 

In  the  imbroglio  of  the  Government  with 
the  house  of  Phelps,  Dodge  &  Co.,  the  Gov- 
ernment has  come  off*  second  best.  The  re- 
sult is  just  what  all  well-informed  and  sen- 


sible people  in  this  community  expected. 
The  charge  that  an  attempt  had  been  made 
by  that  house  to  violate  the  Revenue  laws 
and  defraud  the  Government  was  felt  to  be 
incredible  and  monstrous.  William  E. 
Dodge  is  too  well  known  in  Tarrytown  and 
its  vicinity  to  have  his  own  reputation  or 
that  of  his  house  tarnished  by  any  accusa- 
tion unless  it  were  accompanied  with  the 
most  positive  and  overwhelming  proofs. 
Our  peoj)le  know  the  man.  They  have 
seen  his  going  in  and  out  among  them. 
They  are  thoroughly  assured  of  his  spot- 
less integrity  and  of  his  broad  and  gener- 
ous nature,  as  far  as  possible  from  every- 
thing like  grasping  meanness  or  dishonest 
dealing.  And  just  because  they  know  him, 
they  would  not  believe  him  guilty  of  an  in- 
tentional wrong  in  this  matter,  though  it 
were  charged  by  an  army  of  tricky  subor- 
dinates and  of  interested  spies  and  ijiform- 
ers  as  long  as  from  here  to  sunset.  The 
faith  of  the  people  has  been  fully  justified 
by  the  result. 

Phelps,  Dodge  &  Co.  have  published  the 
facts  to  the  world,  accompanied  with  the 
statement  of  Judge  Davis,  who  was  the 
Government's  District  Attorney  when  the 
proceedings  against  the  house  began,  that 
in  his  belief  there  was  no  shadow  of  fraud- 
ulent intent  on  the  part  of  the  firm.  The 
Government  has  also  responded  to  this 
publication  by  giving  its  version  of  the 
story  and  such  i)arts  of  the  correspondence 
as  would  tend  to  sustain  it  in  its  course. 
But,  curiously  enough,  the  stauments  of 
Phelps,  Dodge  &  Co.,  which  carried  their 
own  voucher  on  their  face,  are  confinned 
and  rendered  all  the  more  impressive 
by  the  very  documents  brought  forward 
against  them  by  the  other  side.  So  that 
"  the  engineer  is  hoist  with  his  own  pe- 
tard." 


[From  The  New  York  Tribune.] 

A  correspondent  wants  to  know  the 
names  of  the  Federal  office-holders  who 
shared  in  the  plunder  of  Phelps,  Dodge  & 
Co.  By  law,  the  money  received  from 
compromises  and  forfeitures  in  revenue 
cases  is  divided  as  follows :  One-half  to  the 
Government ;  one-quarter  to  the  infonner ; 
and  the  remaining  quarter  to  the  Collector, 
Surveyor,  and  Naval  Officer,  in  equal  parts. 
Each  of  these  three  officials  consequently 
gets  in  the  present  case  $22,583.  It  is  a 
dirty,  disreputable  business,  and  our  Gov- 
ernment ought  to  be  ashamed  of  itself. 


60 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


THE  POWER  OF  THE  POLITICIANS. 


[Fh'om  an  Editorial  in  The  New  York  Tribune, 
May  9,  1873.] 
Here  is  a  case  nearer  home — under  our 
very  eyes — a  case  that  illustrates  the  help- 
lessness of  the  people  and  the  subjection  of 
our  commercial  and  business  interests  to 
the  despotic  power  of  as  bad  a  gang  of 
politicians  as  ever  prostituted  the  scales  of 
justice  to  dividing  loot.  A  great  commer- 
cial house,  one  of  the  first  in  the  country, 
with  an  established  character  and  unsullied 
reputation,  of  large  wealth  and  most  exten- 
sive business  relations  throughout  the 
world,  was  taken  by  the  throat  and  robbed 
of  over  a  quarter  of  a  million  of  dollars. 
Robbery  is  a  hard  word.  Were  the  names 
of  all  the  men  who  shared  in  the  proceeds 
of  this  transaction  published,  it  would 
seem  still  harder,  for  they  are  dainty  gen- 
tlemen, with  nothing  of  the  Robin  Hood  or 
Friar  Tuck  about  them  ;  scholarly  persons, 
who  pluck  by  precedents  and  pinch  for 
penalties  ;  who  only  seek  to  vindicate  law 
and  save  the  Government  from  loss  ;  who 
handle  currency  with  gloved  finger-tips, 
and  if  they  divide  with  spies  and  informers, 
do  it  with  a  lofty  grace  and  enough  of  in- 
directness to  deodorize  the  plunder.  But 
robbery  is  the  name  for  it,  whoever  carried 
away  the  ill-gotten  profits,  or  by  whatever 
process  it  was  divided.  Look  a  moment  at 
the  facts.  Not  the  ex  parte  statements  of 
the  victims,  but  the  facts  admitted  by  the 
informers  and  their  partners,  and  published 
as  an  angry  answer  to  the  explanation 
offered  by  the  firm.  In  five  years  this  firm 
had  imported  goods  to  the  value  of  forty 
millions  of  dollars.  Upon  those  imports 
they  had  paid  the  Uaited  States  Govern- 
ment eight  million  dollars  in  duties.  By  a 
system  of  espionage  which  would  be  a  dis- 
grace to  any  country,  it  was  discovered  that 
upon  these  five  years'  importations  of  forty 
millions  there  had  been  overvaluations  of 
some  and  undervaluations  of  other  articles 
— the  latter  to  the  amount  of  $6,680,  upon 
which  there  was  due  the  Government  the 
sum  of  $1,660  (one  thousand  six  hundred 
and  sixty  dollars).  And  the  prosecuting 
officer  of  the  Government  says  publicly  that 
he  does  not  believe  the  idea  of  defrauding 
the  Government  had  ever  entered  the  mind 
of  any  member  of  the  firm.  What  does  an 
Administration  that  has  pardoned  more 
defaulters,  compromised  at  a  loss  to  Gov- 


ernment more  frauds  and  embezzlements 
and  thefts  than  any  three  of  its  predecessors, 
whose  habit  of  appointing  rogues  to  office 
is  only  less  fixed  and  pronounced  than  that 
of  pardoning  them  when  caught  and  con- 
victed of  crime  —  an  Administration  of  a 
party  whose  proudest  boast  is  that  it  has 
survived  a  deluge  of  investigations,  and 
whose  shame  it  is  that  it  had  to  pack  the 
committees  that  made  them  —  what  does 
such  an  Administration,  reeking  with  the 
stench  of  offences  that  run  up  and  down  the 
scale  from  bribery  to  perjury,  do  with  this 
case,  in  which  by  an  innocent  mistake  the 
Government  has  lost  the  paltry  sum  of 
sixteen  hundred  dollars  in  transactions 
covering  forty  millions  ?  What  did  it  do  ? 
Well,  what  should  it  do?  What  would 
you  expect  such  an  Administration  to  do  ? 
It  reached  out  and  took  Phelps,  Dodge  & 
Co.  by  the  throat  as  it  might  take  any  other 
firm  or  any  other  man,  and  held  them  till 
they  disgorged  $140,500  to  a  ring  of  politi- 
cians and  $130,500  to  the  Government ;  and 
the  characterless  spies  and  informers  who 
got  the  money  put  on  airs  of  virtue  and 
bragged  that  they  had  vindicated  the  law 
against  Phelps,  Dodge  &  Co.,  and  punished 
them  for  fraud. 

Does  anybody  ask  why  the  authorities 
that  habitually  compound  felonies  upon 
terms  that  make  felony  profitable,  should 
exact  from  innocent  persons  over  a  quarter 
of  a  million  dollars  for  a  mistake  by  which 
the  Government  lost  only  sixteen  hundred  V 
Follow  the  money  x>aid  over  and  see  into 
whose  hands  it  goes  to  be  divided.  They 
wanted  the  money.  They  got  it.  They  can 
to-day,  as  they  have  heretofore,  read  the 
correspondence  of  any  man  or  firm  whose 
letters  pass  through  the  mails.  They  may 
seize  any  man's  books  and  accounts.  They 
may  put  an  end  to  his  business  by  obstruc- 
tion and  interference.  Commerce  and  trade 
are  at  their  mercy.  It  is  n't  worth  while  to 
get  excited  about  it.  It  is  a  mere  abstrac- 
tion. Phelps,  Dodge  &  Co.  are  rich  and 
can  afford  it.  The  Government  people  are 
gorged  with  their  $140,000,  and  it  is  n't 
likely  they'll  pick  up  anybody  else  at  pre- 
sent.    We  are  safe. 

And  yet,  perhaps,  by  and  by  the  people 
will  find  it  worth  their  while  to  turn  this 
matter  over  a  little  thoughtfully  and  see 
what  sort  of  men  these  are  who  run  the 
Government,  and  what  sort  of  Government 
tliey  are  giving  us. 


ACTION    OF    THE 

NEW  YORK 
CHAMBER   OF  COMMERCE. 


THE  CHAMBER  OF  COMMERCE. 


Proceedings  at  the  Annual  Meeting,  May  1st,  1873. 


PHELPS,  DODGE  &  CO.  SUSTAINED. 


WILLIAM  E.  DODGE  RE-ELECTED  TO  THE  PRESIDENCY. 


[From  The  New  York  TRiiursK,  May  2, 1S73.] 

The  Chamber  of  Commerce  held  its  105th 
annual  meeting  yesterday,  William  E.  Dodge 
presiding. 

Mr.  Dodge  called  Mr.  Sturges  to  the  chair, 
and  the  Nominating  Committee  reported  the 
selections  for  officers  for  the  ensuing  year. 
They  were  duly  balloted  for  and  elected,  as 
follows : 

President,  William  E.  Dodge;  First  Vice- 
President,  George  Opdyke ;  Second  Vice-Pre- 
sident, William  M.  Vermilye ;  Third  Vice- 
President,  Samuel  D.  Babcock ;  Fourth  Vice- 
President,  Solon  Humphreys  ;  Treasurer, 
Francis  S.  Lathrop :  Secretary,  (ieorge  Wilson. 

Executive  Committee — A.  A.  Low,  Chair- 
man ;  Charles  H.  Russell,  John  C.  Green, 
James  M.  Brown,  R.  Warren  Weston,  William 
II.  Fogg,  Jackson  S.  Schultz,  Samuel  B. 
Ruggles,  D.  Willis  James,  Paul  N.  Spofford, 
John  Taylor  Johnston,  Elliot  C.  Cowdin, 
Sinclair  Tousey. 

Mr.  Dodge  was  again  called  to  the  chair, 
and  responded  feelingly,  as  follows : 

Gentlemen  of  the  Chamber  :  I  thank  you 
for  this  renewed  evidence  of  your  confidence. 
•It  had  been  my  intention  to  have  declined  a 
nomination  this  year  had  it  been  tendered,  as 
other  duties  demanded  my  attention,  but  the 
kind  intimation  of  your  Nominating  Commit- 
tee led  me,  in  the  peculiar  position  in  which  I 


have  been  placed  before  the  public  during  the 
past  few  months,  to  allow  my  name  to  be 
again  presented  ;  and  your  action  at  this  time 
is  the  more  gratifying  as  it  gives  assurance  of 
your  continued  confidence.  It  has  been  not 
a  little  trying  to  be  publicly  accused  of  an 
attempt  to  defraud  the  Goveiiiment,  while  for 
the  moment  we  were  not  prepared  to  explain 
our  position,  and  yet  having  a  perfect  con- 
sciousness of  having  done  nothing  to  warrant 
the  charges  made  against  us.  Having  been 
actively  engaged  in  business  in  this  city  for 
nearly  a  half  century,  without  ever  having  my 
integrity  called  in  question,  it  was  mortifying 
in  the  extreme  to  see  newspapers  from  day  to 
day  placing  my  firm  before  the  public  in  such 
a  position  as  left  the  impression  that  we  had 
been  for  years  engaged  in  a  systematic  attempt 
to  defraud  the  revenue.  I  may  be  pardoned 
for  detaining  you  for  a  moment  to  say  that  if 
this  had  been  simply  a  matter  between  our- 
selves and  the  Government  it  could  at  once 
have  been  adjusted  without  any  reflection  on 
our  mercantile  reputation  ;  but  the  revenue 
laws,  as  at  present  administered,  offer  such  a 
premium  for  officials,  that  even  the  ruin  of  a 
merchant's  standing  is  not  to  be  considered 
when  there  is  s^  shadow  of  a  chance  to  secure 
money  even  by  making  the  better  appear  the 
worse.     In  our  case  we  found  the  several 


64 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


parties  who  were  to  share  in  whatever  they 
could  obtain,  had  secured  the  services  of  some 
half  dozen  lawyers,  who  were  devoting  all 
their  efforts  to  secure  their  end,  even  at  the 
cost  of  our  good  name.  Fearful  charges  were 
made  in  public  and  in  private  so  as  to  intimi- 
date us,  while  we  were  denied  the  proof  which 
the  Government  officials  assumed  to  hold  by 
the  possession  of  our  books  and  papers.  Our 
public  statement  will  have  explained  more 
fully  our  reasons  for  offering  in  settlement  for 
what  we  have  always  claimed  as  only  techni- 
cal errors,  a  sum  which,  in  comparison  with 
all  they  have  been  able  to  prove,  was  many 
hundred  times  in  excess.  I  will  only  add  that 
since  we  have  fully  understood  the  case  we 
have  continued  to  regret  ever  having  paid  a 
dollar.     [Applause.] 

******* 

Geo.  W.  Dow  offered  the  following  resolu- 
tion : 

Whereas^  Certain  resolutions  touching  the 
Revenue  or  Tariff  laws  of  this  country  were 
introduced  into  this  Chamber  on  the  Yth  day 
of  March,  18*72,  and  referred  to  Committee 
No.  4,  with  povver  to  add  to  its  numbers,  for 
a  full  and  careful  consideration  and  report; 
and  whereas,  itt  is  understood  that  said  Com- 
mittee deemed  it  inexpedient  at  that  time  to 
go  into  the  matter  in  consequence  of  the 
excitement  attending  the  Presidential  election, 
and  no  report  has  yet  been  made ;  and  where- 
as, this  subject  is  believed  to  be  of  the  highest 
importance,  not  only  to  the  mercantile  com- 
munity, but  also  to  our  country  at  large; 
therefore, 

Jiesolvedy  That  Committee  No.  4  be  re- 
quested to  give  earnest  attention  to  the  reso- 
lutions above  named,  and  also  to  examine  the 
laws  relating  to  penalties  and  additional 
duties  as  now  imposed,  and  to  recommend 
such  alterations  of  the  same  as  will  protect 
the  honest  importer  from  the  forfeitures  and 
fines  which  should  fall  upon  those  only  who 
are  dishonest  and  unscrupulous;  and  said 
Committee  is  hereby  requested  to  make  its 
report  by  or  before  the  4th  day  of  December 
next. 

Mr.  Dow  then  spoke  of  the  inconsistencies 
of  the  tariff  laws,  and  the  difficulty  which 
honest  importers  had  in  interpreting  them. 
He  denounced  a  system  which  classed  honest 
importers  and  swindlers  in  the  same  category, 
and  felt  that  he  expressed  the  general  senti- 


ment of  the  Chamber  when  he  declared  his 
unshaken  faith  in  the  integrity  and  honor  of 
William  E.  Dodge  and  the  house  of  Phelps, 
Dodge  &  Co,     [Applause.] 

Mr.  Hewitt  rose  to  second  the  resolutions, 
and  said  that  there  were  two  objections  to  the 
laws.  One  was  the  crude,  imperfect  and  impro- 
per laws  themselves,  and  the  other  the  character 
of  the  officials  who  executed  them.  He  eulo- 
gized the  house  of  Phelps,  Dodge  k  Co.,  char- 
acterizing it  as  one  of  the  most  illustrious  in 
the  world.  The  resolutions  were  then  unani- 
mously adopted. 

******* 

THE  ANNUAL  DINNER. 

The  annual  dinner  of  the  Chamber  of  Com- 
merce of  New  York  was  given  at  Delmonico's 
last  evening.  The  hour  for  the  dinner  was 
1:S0 ;  and  when  the  guests  were  invited  to 
enter  the  dining-room,  the  ante-room  was  too 
full  for  comfort.  Among  the  prominent 
members  of  the  Chamber  who  were  present 
were:  William  E.  Dodge,  President;  A.  A. 
Low,  Samuel  D.  Babcock,  Geo.  Opdyke,  Wm. 
IL  Fogg,  J.  Pierpont  Morgan,  R,  Warren 
Weston,  John  D.  Jones,  Joseph  W.  Drexel, 
Henry  F.  Spaulding,  William  Borden,  Chas,  L. 
Tiffany,  Charles  E.  Beebe,  S.  B,  Chittenden, 
Jonathan  Sturges,  Jeremiah  P.  Robinson, 
James  L.  Worth,  Charles  G.  Landon,  Charles 
Butler,  Abram  S,  Hewitt,  Samuel  B.  Ruggles, 
D.  Henry  Haight,  George  W.  Lane,  Orestes 
Cleveland,  Francis  Baker,  Simon  de  Visser, 
Wm.  M.  Vermilye,  Jacob  Wendell,  Joseph 
Hyde  Sparks,  Ambrose  Snow,  Francis  S.  La- 
throp,  James  M.  Brown,  J.  Scligman,  Wm. 
H.  Guion,  James  S.  T.  Stranahan,  L.  B.  Wy- 
man,  Wm.  H.  Webb,  Paul  N.  Spofford,  Parker 
Handy,  Morris  K.  Jesup,  Chas.  C.  Duncan, 
Wm.  E.  Dodge,  Jr.,  George  T.  Hope,  Freder- 
ick S.  Winston,  and  George  Wilson,  Secretary. 

Among  those  who  were  present  as  guests  of 
the  Chamber  of  Commerce  were  :  William  M. 
Evarts,  Charles  O'Conor,  Gen.  Joseph  R. 
Hawley  (Hartford),  the  Rev.  William  Adams, 
D.  D.,  the  Rev,  Roswell  D.  Hitchcock,  D,  D., 
the  Rev.  Theodore  L.  Cuyler,  D.  D,,  Gen. 
Winfield  S.  Hancock,  David  M.  Stone,  Wirt 


PROCEEDINGS  AT  CHAMBER  OF  COMMERCE. 


65 


Dexter,  the  Hon.  C.  C.  Uhilds  of  Philadelphia, 
the  Hon.  J.  M.  Van  Cott,  John  Jay  Knox, 
Richard  S.  Evans  of  London,  Jadj^e  Charles 
P.  Daly,  the  Hon.  John  R.  Brady,  Dr.  Henry 
R.  Lindeman,  Prof.  Joseph  Henry,  Edward 
M.  Archibald,  the  Hon.  Stewart  L.  Woodford, 
Commodore  J.  H.  Strong,  the  Hon.  David  B. 
Mellish,  the  Hon.  Fernando  Wood,  Johannes 
Rosing,  the  Hon.  John  E.  Devlin,  the  Rev. 
Alfred  P.  Putnam,  D.  D.,  the  Hon.  Wm.  J. 
McAlpine,  the  Rev.  E.  H.  Chapin,  D.  D.,  John 
W.  Simonton,  Peter  Williams,  the  Hon.  David 
A.  WelLs,  Waldemar  de  Bodisco,  C.  G.  for 
Russia,  the  Hon.  Samuel  J.  Tilden,  Hipolito 
de  Uriarte,  and  T.  A.  A.  Havemeyer. 

About  150  persons  were  pre.«»ent.  The  din- 
ing hall  was  decorated  with  the  arms  of  Great 
Britain,  Austria,  the  United  States,  and  New- 
York,  appropriately  festooned  with  flags.  A 
long  table  was  placed  along  one  side  of  the 
hall,  at  which  were  seated  William  E.  Dodge, 
President  of  the  Chamber,  the  Hon.  William 
M.  Evarts,  the  Rev.  Dr.  Adam.s,  the  Hon.  Sam- 
uel J.  Tiiden,  ex-Judge  Joshua  M.  Van  Cott. 
George  Opdyke,  the  Rev,  Dr.  Putnam,  Chief- 
Justice  Daly,  and  others. 

At  the  close  of  the  dinner,  Mr.  Dodge  in- 
troduced the  first  toast  and  speaker  in  the 
following  brief  speech : 

SPEECH    OF    WM.    E.    DOIXJE. 

Gentlemen  :  We  are  met  on  this  annivers-i- 
ry  evening  in  this  social  way  in  much  larger 
nunibei-s  than  can  usually  attend  on  our 
regular  monthly  meetings.  Many  of  our 
friends  who  are  unable  amid  the  pressure  of 
business  to  meet  witli  u.<<,  and  yet  feel  a  deep 
interest  in  the  Chamber,  are  enabled  at  these 
annual  dinners  to  renew  their  aocjuaintance 
with  the  iuerabei*s  and  tjike  part  in  the  discus- 
sions that  may  come  before  us.  There  are 
important  interests  connected  with  the  pros- 
perity of  our  commerce  which  should  command 
the  careful  consideration  of  the  Chamber,  but 
which  can  hardly  be  attempted  during  our 
hurried  meetings  at  mid-day.  The  question 
of  rapid  transit,  of  wharfs  and  piers,  better 


facilities  for  shipping  and  receiving  freight  by 
our  railroads,  the  enlargement  and  cheapening 
of  canal  transportation,  the  u.se  of  steam  for 
propelling  the  boats,  the  great  question  now 
agitating  the  country  how  to  facilitate  and 
cheapen  the  carriage  of  produce  from  the  West 
to  the  seaboard,  and  particularly  to  bring  it  to 
our  city,  the  encouragement  necessary  to  se- 
cure American  steamships,  and  the  great 
questions  of  finance  and  the  currency,  all  these 
demand  the  most  careful  consideration,  and 
we  can  but  hope  that  by  these  evening  gath- 
erings a  new  interest  will  be  awakened  that 
will  .secure  a  larger  attendance  at  our  regular 
meetings.  But  I  did  not  intend  myself  to 
occupy  any  time,  and  will  at  once  proceed  to 
present  the  first  regular  toast  of  the  evening. 

Mr.  Dodge  then  gave  the  first  toast :  "  Com- 
merce, the  great  disseminator  of  Christian 
civilization,"  and  called  upon  the  Rev.  Dr. 
Adams,  who  responded. 

SPEECH   OK    DR.    ADAMS. 

[Reported  by  Tub  N.  T.  Sun.] 

The  reverend  gentleman  described  commerce 
as  a  powerful  agent  in  diffusing  Christianity 
and  bringing  nations  together.  "  What  grand 
lessons  of  Christianity,"  he  said,  "  do  you 
learn  on  the  docks  and  in  the  Custom-House  ?" 

Here  the  doctor  Mas  interrupted  by  audible 
smiles,  and  a  smile  gradually  overspread  his 
own  placid  countenance.  He  continued  :  "  I 
see  an  incredulous  smile  on  the  face  of  a 
friend."     [Hearty  laughter.] 

"It  compels  me  to  say  in  explanation  of  the 
word,  that  I  mentioned  it  as  relating  to  that 
vast  variety  of  commodities  representing  the 
different  nations  of  the  globe  supposed  to  pass 
through  the  Custom  House.  I  did  not  speak 
of  the  system  of  man-traps  [applause] — not 
of  the  place  where  fattened  depredators  gfow 
rich  on  the  spoils  which  they  get  within  reach 
of  their  tentaculars.  The  object  of  civil  gov- 
er^iment  is  not  to  hurt  but  to  help,  not  to 
oppress  but  to  protect.  I  wonder  that  the 
merchants  of  this  metropolis  do  not  spring  to 
their  feet  in  protest  against  the  atrocious  idea 


66 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


not  to  be  regulated  by  obvious  equity,  but  by 
literal  technicalities.  [Applause.]  Your  voices 
should  be  raised  like  the  sound  of  many  wa- 
ters above  partizan  clamor  in  vindication  of 
your  rights  and  of  justice.  The  publican  in 
the  Scripture  offered  to  restore  what  he  had 
wrongfully  taken  fourfold.  Here  an  upright 
citizen  is' required  to  pay  for  a  breach  of  tech- 
nicality one  hundred  fold.  Pardon  this  unex- 
pected parenthesis.  Distinguished_^merit  will 
always  rise  superior  to  opposition,  and  draw 
lustre  from  conspiracy  and  reproach." 

SPEECH   OP   MR.    A.    A.    LOW. 

{Tribune  Report.) 

The  third  toast  was : 

*'  Chambers  of  Commerce — the  best  conser- 
vators of  true  commercial  principles,  and  the 
most  efficient  organs  through  which  mer- 
chants may  exert  their  proper  influence  upon 
commercial  legislation." 

This  was  responded  to  by  A.  A.  Low, 


Mr.  Low  said  that  in  union  there  was 
strength,  in  a  multitude  of  counseloi-s  there 
was  wisdom,  and  this  would  seem  to  be  about 
enough  for  this  occasion.  The  Chamber  had  a 
multitude  of  men,  representatives  of  this  great 
commercial  emporium.  They  were  the  men 
who  dominated  public  sentiment  in  matters  of 
commerce,  and  ought  to  do  so.  It  was  their 
duty  to  speak  when  flagrant  wrongs  were  con- 
doned by  improper  compromises  and  honest 
merchants  were  made  to  pay  penalties  one 
hundred  times  in  amount  of  the  offense  which 
was  claimed  to  have  been  committed.  [Ap- 
plause.] It  was  doubtless  true  that  immense 
wrongs  had  been  committed  against  the  United 
States,  involving  losses  to  the  Government  of 
many  hundreds  of  thousands,  and  these  were 
compromised  by  the  abandonment  of  a  just 
claim  for  one-half  the  amount,  while  an  honest 
man  is  compelled  to  pay  one  hundred  times 
the  amount  claimed  to  be  lost  by  some  techni- 
cal irregularity.     [Applause.] 


COMMENTS  OF  THE  PRESS. 


iFro7n  TuE  N.  Y.  Tribune,  May  2,  18T3.] 

The  New  York  Chamber  of  Commerce,  a 
time-honored  and  influential  institution,  yes- 
terday entered  its  weighty  protest  against  the 
present  administration  of  the  Revenue  laws. 
That  protest  took  shape  in  the  unanimous  re- 
election of  Mr.  Wm.  E.  Dodge  to  the  Presi- 
dency of  the  Chamber,  and  the  passage  of  a 
resolution  instructing  one  of  its  standing  com- 
mittees immediately  to  examine  the  laws  re- 
lating to  Custom-house  seizure,  with  a  view  to 
their  amendment  by  the  next  session  of  Con- 
gress. 


[From  The  Nation,  May  8, 1873.] 

At  the  annual  meeting  of  the  Chamber  of 
Commerce  on  Thursday  of  last  week,  Mr.  Wm. 
E.  Dodge  was    re-elected    President.      This 


signal  mark  of  confidence  the  Chamber  fol- 
lowed up  by  heartily  applauding  speeches  in 
which  unshaken  faith  in  the  integrity  and 
honor  of  his  house  was  expressed,  and  by 
unanimously  adopting  resolutions  instructing  a 
committee  ''  to  examine  the  laws  relating  to 
penalties  and  additional  duties  as  now  im- 
posed, and  to  recommend  such  alterations  of 
the  same  as  will  protect  the  honest  importer 
from  the  forfeitures  and  fines  which  should 
fall  only  upon  those  who  are  dishonest  and 
unscrupulous."  Mr.  Dodge  himself,  in  ac- 
knowledging the  honor  conferred  upon  him, 
stated  that  except  for  the  attitude  in  which  his 
firm  had  been  placed  by  the  Government  he 
should  have  declined  a  renomination.  Refer- 
ring to  the  excessive  payment  in  settlement 
made  by  Phelps,  Dodge  &  Co.,  he  said  that 
since  they  had  fully  understood  the  case,  they 
regretted  ever  having  paid  a  dollar  ;  and  this, 


COMMENTS  OF  THE  PRESS. 


67 


as  we  have  before  had  occasion  to  remark,  is 
the  only  regret  which  tlie  public  can  entertain 
on  their  account.  Wliile  this  rebuke  to  the 
Government  for  ita  outrageous  treatment  of 
one  of  the  half-ch)/en  representative  firms  of 
the  country  was  being  ottered  by  tlic  leading 
merchants  of  its  chief  city,  at  Vienna  the  open- 
ing of  the  Exposition  on  the  same  day  gave 
equal  occasion  to  Americans  to  blush  for  the 
care  which  the  Government  bestows  on  the 
commercial  and  industrial  interests  of  the 
people,  whether  at  home  or  abroad. 


[From  The  N.  Y.  Obsebvee,  J/ay  8, 1878.1 
MR.  DODGE'S  VINDICATION. 

We  do  not  know  in  what  way  a  more  com- 
plete vindication  of  the  good  name  of  Hon. 
Wm.  E.  Dodge  could  be  made  than  that  which 
he  received  on  Thursday  last.  The  high 
standing  of  the  New  York  Chamber  of  Com- 
merce is  well  known.  There  is  not  a  body  of 
more  honorable  merchants  in  the  world  than 
the  men  who  compose  and  control  this  Board. 
Mr.  Dodge  has  for  some  time  past  been  Presi- 
dent of  the  Chamber,  and  in  view  of  the 
recent  ditlicultics  which  his  firm  has  had  with 
the  (Jovernment,  the  annual  mcetihg  for  the 
election  of  officci*s  was  anticipated  with  no 
little  interest  by  Mr.  Dodge's  friend.s.  He 
himself  had  decided  to  decline  being  a  candi- 
date for  re-election,  but  the  nominating  com- 
mittee urged  him  to  allow  his  name  to  be 
used,  and  at  the  regular  annual  meeting  he 
was  unanimously  re-elected  President  for  the 
coming  year.  We  regard  this  as  the  strongest 
endoi'sement  of  Mr.  ])odge  and  of  the  firm  of 
Phelps,  Dodge  &  Co.  that  could  be  made  by 
the  merchants  of  New  York,  with  many  of 
whom  the  house  has  been  in  intercourse  for 
nearly  half  a  century. 

We  heartily  rejoice  in  this  most  satisfactory 
vindication  of  one  who  has  been  held  in  such 
high  esteem,  and  who  has  occupied  so  con- 
spicuous and  inlluential  a  position  in  the 
Church  and  in  the  country.  The  vindication 
is  all  the  more  sjitisfactory  coming  from  such  a 
source,  liom  men  of  business,  whose  motives 
in  paying  this  tribute  to  the  honorable  stand- 
ing of  one  of  their  own  number  cannot  be 
called  in  question. 

There  is  one  more  act  of  justice  due  the 
firm  of  Phelps,  Dodge  &  Co.  It  is  the  restitu- 
tion of  the  money  which  has  been  taken  from 
them,  by  legal  process'  it  is  true,  but  by  a 
species  of  black-mailing  that  in  all  transactions 
between  man  and  man  would  fail  to  be  re- 
garded as  honest. 


[From  The  Albany  Argus,  J/ay  3,  1878.] 
THE  CHAMBER  OF  COMMERCE. 

The  action  of  the  New  York  Chamber  of 
Commerce,  in  re-electing  Wm.  E.  Dodge  as  its 
President,  is  a  comj)lete  vindication  of  the 
firm  of  Phelps,  Dodge  &  Co.,  and  a  merited 
rebuke  of  the  Federal  blackmailers  who  robbed 
the  firm  of  ;ft27l,0(K»  as  penalty  for  uninten- 
tional frauds  amounting  to  less  than  $2,000. 
We  have  heretofore  shown  that  the  Govern- 
ment had  the  right  to  remit  the  entire  penalty, 
if  it  could  assume  to  compromise  the  att'air  at 
all.  The  law  is  specific.  Under  its  terms  the 
firm  of  Phelps,  Dodge  &  Co.  were  liable  in  the 
sum  of  one  million  of  dollars,  if  liable  at  all ; 
and  the  Goveniment  had  the  power  to  remit 
the  entire  amount,  if  satisfied  that  fraud  was 
not  intended.  That  no  fraud  was  intended 
would  seem  to  be  plain  i'rom  the  small  amount 
conceded  to  have  been  due,  the  total  amount 
of  duties  lost  being  admitted  by  the  (govern- 
ment to  have  been  only  ;*!l,5(K>.  It  is  not  to 
be  supposed  that  the  firm  deliberately  perpe- 
trated any  such  petit  larceny  operation' ;  and  if 
it  had  not  been  tluit  the  amount  received  was 
to  be  divided  among  the  officials,  not  one 
cent  would  have  been  claimed.  The  amount 
to  which  the  Treasury  was  entitled  was  will- 
ingly conceded  by  the  avaricious  persecutors 
of  the  firm  ;  but  they  wanted  their  own  share 
too  badly  to  concede  a  cent  of  that.  Of  the 
sum  thus  villianously  extorted,  $180,000  went 
to  the  blackmailers,  $11,000  was  paid  as  costs, 
and  the  Government  received  the  remainder. 

The  Chamber  of  Commerce  not  only  vindi- 
cates the  outraged  firm,  but  it  prepares  for 
aggressive  war.  A  committee  has  been  ap- 
pointed to  consider  the  question  of  radically 
modifying  the  revenue  or  tariff  laws,  and  also 
to  examine  the  laws  relating  to  penalties  and 
additional  duties  as  now  imposed,  and  to  re- 
connnend  such  alterations  of  the  same  as  will 
protect  the  honest  importer  from  the  forfeit- 
ures and  fines  which  should  fall  only  upon 
those  who  are  dishonest  and  unscrupulous. 

There  is  no  danger  that  this  movement  will 
result  too  greatly  to  the  advantage  of  the  im- 
porter. Congress  does  not  seem  disposed  to 
look  with  iavor  even  upon  the  rights  of  con- 
sumers as  against  monopolists,  and  much  less 
is  it  likely  to  give  the  importers  any  undue 
advantage.  The  revenue  laws  are  now  unne- 
cessarily cumbersome,  fearfully  oppressive  and 
convenient  instruments  for  blackmail  opera- 
tions. These  evils  nmst  be  remedied.  Agita- 
tion to  that  end  will  be  the  leading  question 
in  the  next  Congress.  It  is  to  be  hoped  that 
weak  subterfuges  and  shuffling  compromises 
will  be  no  longer  tolerated.  There  is  a  wide 
margin  between  the  exorbitant  and  extortion- 


68 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


ate  tariff  under  wliicli  the  country  is  now 
groaning,  and  the  ruined  industries  which  the 
monopolists  pretend  will  follow  from  any 
change. 


[From  The  Baltimore  Inquirkr,  3fay  6, 1873.] 

The  re-election  of  Mr.  Wm.  E.  Dodge  to  the 
Presidency  of  the  New  York  Chamber  of  Com- 
merce, is  the  most  emphatic  condemnation  of 
the  late  action  of  the  Treasury  Department  in 
the  matter  of  the  alleged  frauds  upon  the 
revenue  by  Phelps,  Dodge  &  Co.  that  any  pub- 
lic body  could  have  given.  It  is  impossible  to 
suppose  that  an  influential  body  of  merchants 
like  the  Chamber  of  Commerce  of  New  York 
city,  would  select  for  its  presiding  officer  the 
head  of  a  house  tainted  with  the  dishonesty 
and  fraud  implied  in  the  charges. 


IFrom  The  Springfield  Republican,  May  8, 1873.] 

The  case  of  Phelps,  Dodge  &  Co.  is  in  every- 
body's mind.  We  shall  feel  amply  compen- 
sated for  this  great  scandal,  if  it  arouses  the 
merchants  of  New  York  to  a  sense  of  their 
political  responsibilities.  There  are  indications 
of  such  a  result.  The  New  York  Chamber  of 
Commerce,  at  their  annual  meeting  Thursday 
night,  re-elected  Wm.  E.  Dodge  President,  and 
took  pains  to  give  this  action  the  air  of  a 
rebuke  to  the  Government. 


[From  The  Tarrytowx  Argus,  May  3,  1873.] 

There  is  but  one  feeling  in  the  public  mind. 
It  is  that  the  Government  has  been  guilty  of 
an  outrage,  and  ought  to  send  back  the  money 
with  an  humble  apology.  We  are  glad  to  see 
that  the  New  York  Chamber  of  Commerce  re- 
buked the  Government  on  Thursday  by  unan- 
imously re-electing  Mr.  Dodge  as  its  President. 


[From  The  Janesville  {Wis.)  Gazette.] 

Hon.  Wm.  E.  Dodge,  senior  member  of  the 
firm  of  Phelps,  Dodge  &  Co.,  which  has  lately 
had  difficulty  with  the  Treasury  Department, 
was  yesterday  unanimously  elected  President 
of  the  New  York  Chamber  of  Commerce. 
This  action,  it  is  understood,  has  been  adopted 
to  express  the  conviction  of  the  merchants  of 
New  York  that  the  firm  was  innocent  of  the 
charges  preferred  against  it  by  the  revenue 
officers  of  the  Government. 


[From  The  Agk,  {Ilottston,  Texas,)  May  3.  1878.J 

The  re-elpction  of  Mr.  Dodge,  on  Thursday, 
to  be  President  of  the  New  York  Chamber  of 


j  Commerce,  is  of  itself  a  very  powerful  vindi- 
!  cation.  It  is  a  declaration  by  the  leading 
business  men  of  the  great  metropolis,  who  cer- 
tainly know  and  appreciate  fully  the  circum- 
stances in  the  case,  that  confidence  in  his 
moral  integrity  and  commercial  honor  is  un- 
shaken. 


[From  The  Boston  Gazette,  May  4, 1873.] 

Tlie  proceedings  against  Phelps,  Dodge  & 
Co.,  of  New  York,  for  defrauding  the  revenue, 
are  such  as  should  attract  universal  attention. 
There  is  no  evidence  that  this  firm,  which,  as 
is  generally  known,  is  one  of  the  most  repu- 
table, as  well  as  one  of  the  wealthiest,  in  the 
country,  was  aware  that  there  was  any  wrong 
upon  the -Government  in  its  transactions.  The 
case,  on  its  face,  appears  quite  palpably  one  of 
oversight  only.  The  whole  amount  of  which 
the  Government  was  deprived  was  less  than 
two  thousand  dollars.  Yet  advantage  was 
taken  of  the  technicalities  of  the  law  to  at- 
tempt the  forfeiture  of  a  million  dollars  in 
value  of  goods,  and  the  case  was  finally  settled 
by  exacting  a  fine  of  $271,000  !  As  a  proof 
that  the  merchants  of  New  York  believe  that 
no  wrong  was  intended,  they  have  since  this 
transaction  elected  Mr.  Wm.  E.  Dodge,  one  of 
the  partners  of  the  firm,  as  President  of  the 
Chamber  of  Commerce.  The  leeches  con- 
nected with  the  Custom  House  of  New  York 
are  at  the  bottom  of  this  scandalous  levy  upon 
honorable  merchants.  They  have  received  a 
large  share  of  the  forfeit-money.  It  may  be 
asked  why  did  not  Phelps,  Dodge  &  Co.  appeal 
to  a  jury.  The  probability  is  that  they  feared 
the  enmity  of  the  Custom  House  too  much  to 
do  this  thing.  There  is  power  in  that  body  to 
inconvenience  importers  to  an  enormous  ex- 
tent, and  it  is  often  freely  exercised.  Mr.  A. 
T.  Stewart,  when  he  gave  money  to  aid  the 
Liberal  movement  last  Summer,  made  it  a 
stipulation  that  his  action  should  not  be 
known,  on  the  ground  that  he  could  not  afford 
to  have  the  Custom  House  people  unfriendly 
to  him. 


[From  The  Boston  Post,  Jfay  5,  1873.] 

REVENUE  SPY  SYSTEM. 

In  his  reply  to  the  compliment  of  a  re-election 
to  the  Presidency  of  the  New  York  Chamber 
of  Commerce,  Mr.  Wm.  E.  Dodge  laid  all  the 
troubles  that  had  befallen  his  firm  upon  the 
administration  of  the  revenue  laws,  which 
offers  such  a  premium  to  officials  that  a  mer- 
chant's standing  is  not  considered  in  compari- 
son with  the  opportunity  to  make  money  out 
of  him.     Mr.  Dodge  referred  also  to  the  half 


COMMENTS  OP  THE  PRESS. 


69 


dozen  ol"  more  lawyers  who  were  all  zealously 
working  against  his  house  in  company  with  the 
informers   and  officials,    to    secure   their  end 
even  at  the  cost  of  its  mercantile  standing  of 
half  a  century.     He  especially  regretted  that 
he  had  ever  consented  to  pay  a  dollar  in  com- 
promise, when  he  now  sees  that  his  duty  was 
to  contest  the  case  to  the  last.     But  this  prev-  ! 
alent  reluctance  among  merchants  to  be  even 
temporarily   clouded   with    lawsuits   that    are 
ba8e<l   on   allegations   of  fraud  is  the  strong 
point  which  the  official  informer  seizes  upon. ; 
Detective  Jayne  wrote  to  the  Treasury  in  refer- 
ence to  the  i'lielps,  Dodge  k  Co.  case,  that  the 
Government  was  sure  to  get  more  by  compro- 
mising than  by  going  to  court;  and  District 
Attorney  Bliss  did  not  hesitate  to  forward  his 
opinion   to  the   same   effect  to   Washington,  j 
The   object,   then,   of    the   informer,  is   only ! 
money ;  and  it  is  altogether  too  plain  tliat  the ' 
system  set  on  foot  by  the  revenue  laws  is  pre- 
cisely adapted  to  secure  it.     Protection  to  the 
revenue  is  of  secondary  concern.     If  that  was 
the  object,  no  such  case  as  this  of  Phelps, 


Dodge  &  Co.  could  occur;  for  no  charge 
would  ever  be  compromised  where  the  parties 
accused  were  guilty,  and  money  would  never 
be  tjiken  from  them  where  it  could  be  proved 
that  they  were  innocent. 

The  whole  thing  is  a  network  of  chicanery, 
espionage,  doubleAlealing  and  rapacity ;  a  se- 
ries of  revenue  traps  and  pitfalls,  to  involve 
unsui^pecting  firms  with  technical  guilt,  an<l 
force  them  to  olfer  round  sums  for  official 
greed  in  jirefcrence  to  submitting  to  an  ex- 
posure tluit  is  supposed  in  any  event  to  carry 
more  or  less  infection.  Phelps,  Dodge  &  Co. 
undoubtedly  see  by  this  time  that  it  would 
have  been  morally  better  for  them  to  have 
proved  their  innocent  intent  before  a  court  of 
law,  than  to  have  paid  over  more  than  a 
quarter  of  a  million  to  the  officials  and  re- 
ceived the  brand  from  Mr.  Boutwell  after- 
wards. If  this  experience  and  example  shall 
avail  to  rouse  the  mercantile  c«mimunity  to  its 
duty  in  respect  to  the  revenue  laws,  it  will  not 
be  wholly  a  subject  of  regret. 


CONCLUDING     ARTICLES 


CONCLUDING  ARTICLES. 


[From  The  Nation,  May  8,  1873.] 

THE  CONTRIBUTIONS   OF  THE  GOV- 
ERNMENT  TO  PUBLIC  MORALS. 

We  discussed  on<!  aspect  of  the  Phelps- 
Dodge  aftkir  last  week  —  the  economical 
one.  1'he  matter  ought  not  to  pass  from 
the  public  mind,  however,  without  some 
notice  of  another  and  still  graver  asi)ect  of 
it — the  moral  one  ;  the  imi)ortanceof  which 
is  increased  by  the  spectacle  of  the  frauds, 
defalcjitions,  breaches  of  trust,  venality, 
and,  in  short,  general  loosening  of  the 
bonds  of  honesty  and  fidelity  which  meets 
the  eye  in  every  direction,  and  over  which 
patriots  and  moralists  are  lamentinjr  go 
deeply.  It  is  now  and  has  lonj?  been 
genenilly  conceded  that  governments  owe 
s«mu*thing  more  to  the  cause  of  ffood 
morals  than  legislation  against  vice.  They 
not  only  provide  penalties  for  offences,  but 
they  refuse  the  aid  of  the  judicial  ma- 
chinery for  the  enforcement  of  contracts 
which  are  contra  b(nios  mores — or  "  against 
public  ]x>licy,"  as  the  lawyers  say.  More 
than  this,  they  are  exi)ecte<I  to  refrain  from 
making  money  by  pandering  to  vicious 
tastes  or  habits. 

»  *  ♦  » 

What  has  all  this  got  to  do  with  the 
Phelps- D(Mlg»!  atfuirV  Much,  as  we  think 
we  can  show.  Tiie  legal  proceeding  by 
which  our  Government  punishes  infrac- 
tions of  the  Revenue  laws  is,  in  fonn,  a  civil 
one.  On  its  face,  it  is  a  civil  suit  for  an 
amount  of  damages  i)reviou8ly  fixed  by  the 
statute.  But,  in  reality,  it  is  a  criminal  pro- 
ceeding. The  evidence  to  sustain  it  is  i)ro- 
cured  by  the  criminal  process  of  searches 
and  seizures.  The  amoimt  of  damages  re- 
coverable bears  no  moral  or  mathematical 
relation  to  the  injury  sustained.  It  is,  in 
all  respects,  a  penalty,  and  may  be  a  tre- 
mendous ])enalty,  even  from  a  j)ecuniary 
]Mjint  of  view  ;  as  when  in  the  Phelps-Dodge 
case  a  million  and  a  half  of  dollars  was 
claimed,  and  over  a  quarter  of  a  million 
actually  extortetl,  by  way  of  corajKuisation 
for  the  loss  to  the  revenue  of  little  over 
sixteen  hundred  dollars.  Not  only,  how- 
ever, are  the  damages  a  real  [x?nalty,  but 
the  suit  is,  from  its  very  commencement, 
an  assault  on  character  of  the  most  terrible 
kind.  Private;  individuals  sue  each  other 
for  all  sorts  of  reasons — good,  bad,  and  in- 
different— and  the  public  pays  little  heed  to 
the  ])laintiff's  story  until  it  has  heard  the 
defendant's.  But  when  the  Government 
pursues  a  man  in  the  courts,  it  raises  in  the 


popular  mind  a  strong  presumpticm  of  guilt 
against  him.  There  is  a  traditional  pre- 
judice that  such  a  suit,  b.ing  undeirtaken 
on  public  grounds  and  in  the  public  inter- 
est, cannot  l>e  dictated  by  private  malignity 
or  passion,  and  must  have  an  array  of  facts 
behind  it ;  so  that,  when  the  District  Attor- 
ney files  his  bill  against  a  merchant  to 
l)unish  a  fraud  on  the  revenue,  axid  the 
"  8i)ecial  agent "  seizes  on  his  Ixxiks  and 
pai)er8,  and  the  telegraph  spreads  the  news 
over  the  country,  the  fair  fame  of  a  lifetime 
often  vanishes  in  a  moment.  The  man's 
character  is  damaged  to  an  extent  which  no 
subsequent  refutation  or  vindication  can 
wholly  cure,  because  such  are  the  intricacy 
and  obscurity  of  our  Revenue  laws  that, 
even  if  the  facts  were  clear  of  all  suspicion, 
the  defence  must,  from  the  nature  of  the 
case,  1x3  dry  and  tedious  reading,  while  the 
charge  can  be  contained  in  two  lines  of  a 
spicy  despatch. 

Now,  no  man  is  arraigned  on  a  criminal 
charge  without  a  i)reliminary  investigation 
before  an  impartial  tribunal.  He  is  taken 
Ix'fore  a  magistrate  who  has  no  i)er8onal 
interest  in  his  acquittal  or  conviction,  be- 
fore a  grand  jury  who  are  indifferent  also, 
and  before  a  district  attorney  who,  at  worst, 
is  animated  in  the  prosecution  by  nrithing 
stronger  than  professional  pride.  It  is  only 
after  all  these  have  agreed  that  there  is 
fair  gn)und  for  trying  him,  that  he  is,  as 
the  law  says,  "  put  in  jeopardy  "  before  a 
court.  When,  however,  the  Treasury  directs 
the  prosecution  of  a  merchant,  entailing 
ix)ssibly  the  ruin  of  his  business  and  of  his 
reputation,  it  acts  on  the  report  of  two  {per- 
sons, who  both  have  a  strong  pecuniary 
interest  in  his  conviction — that  is,  it  decides 
to  prosecute  him,  as  it  were,  on  the  com- 
mitment of  a  magistrate  who  will  make 
thousands  of  dollars  by  having  him  found 
guilty  ;  and  on  the  presentment  of  a  grand 
jury  who,  if  he  is  found  guilty,  will  be 
allowed  to  divide  between  them  a  consider- 
able portion  of  his  assets.  But  this  is  not 
the  whole  nor  the  worst.  In  order  to  pro- 
cure the  information  on  which  these  prose- 
cutions are  foimded,  the  Government  does 
not  employ  policemen  and  pay  them  itself 
for  their  services,  as  in  the  case  of  other 
breaches  of  the  law,  and  keep  up  among 
them  by  discipline  a  sense  of  honor  and 
self-respect  and  of  regard  for  the  rights  of 
their  fellow-citizens.  On  the  contrary,  it 
enlists  in  its  service  a  class  of  detectives 
whose  zeal  is  stimulated  not  by  the  pros- 
pect   of  promotion,  or    by    public   spirit, 


74 


THE  CASE  OF  PHELPS,  DODGE  &  CO. 


or  any  of  the  honorable  incentives  to  ex- 
ertion, but  by  the  prosjHsct  of  sharing?  in 
a  division  of  the  criminal's  projierty.  Even 
if  the  experience  of  all  nations  and  ages  as 
to  the  effect  of  this  mode  of  reward  (m  police 
agents  were  not  known  to  us,  we  should 
only  need  very  little  knowledge  of  human 
nature  to  predict  the  result  of  it  on  the 
morals  of  the  officer  and  on  the  peace  and 
welfare  of  persons  ex^wsed  to  his  attacks. 
It  is  a  common  and  justifiable  practice  of 
governments  to  offer  rewards  to  educe  evi- 
dence likely  to  lead  to  the  conviction  of  the 
])erpetrators  of  crimes  already  committed. 
13ut  to  offer  large  rewards  to  persons  who 
will  bring  accusations  and  make  them  good, 
is  a  well-recognized  offence  against  public 
welfare,  to  which  only  the  basest  govern- 
ments in  the  worst  times  have  ever  re- 
sorted, because  it  not  only  breeds  one  of 
the  foulest  classes  of  men,  but  places  all 
good  citizens  at  their  mercy. 

The  detectives  employed  by  our  Govern- 
ment, and  whom  it  dignifies  with  the  name 
of  "Special  Agents,"  are  constantly  trying 
to  prcxiure  materials  for  charges,  and  in 
order  to  do  so  are  constantly  endeavoring 
to  put  themselves  in  communication  with 
"  informers,"  with  whom  they  afterwards 
share  the  enormous  reward.  It  is  well 
known  that  it  is  not  uncommon  to  use 
clerks  as  spies  on  their  employers ;  or  in 
other  words,  to  induce  young  men  to  en- 
gage in  one  of  the  lowest  forms  of  hypocrisy 
and  i)erfidy  of  which  a  man  can  be  guilty, 
and  the  one  which  most  rapidly  and  surely 
eats  out  the  very  roots  of  manliness,  hon- 
esty, and  self-respect.  We  may  depend 
upon  it,  anybody  who  has  ever  taken  Cus- 
)om-house  pay  as  a  s])y,  issues  from  his  em- 
j>l oyer's  counting-house  in  just  that  state 
of  mind  which  makes  slow  and  lawful  gains 
irksome,  and  chances  lor  fraud  and  defal- 
cation welcome.  In  the  Phelps- Dodge  case, 
a  confidential  clerk  first  sells  his  employer's 
business  secrets  to  business  rivals,  and 
spends  his  nights  in  helping  them  to  ran- 
sack their  b(K>ks  and  pai)ers.  When  he  is 
detticted  and  ])rosecuted  and  escapes  through 
a  technicality,  far  from  flying,  he  puts  him- 
self in  communication  with  the  representa- 
tives of  the  United  States  Oovernment,  who 
welcome  him  as  a  valued  coadjutor,  and 
the  result  is  that  by  this  one  stroke  of  ras- 
cality he  walks  off  with  nearly  $70,000,  or, 
in  other  words,  a  larger  fortune  than 
usually  rewards  a  lifetime  of  honest  and 
successful  toil.  It  requires  no  great  effort 
of  the  imagination  to  figure  to  ouo's  self 
the  effect  of  this  man's  performance  on  the 
thousands  of  youth  who  are  serving  in  a 


fiduciary  capacity  in  this  city,  and  to  whom 
long  hours  and  small  salaries  are  hard  to 
bear,  'i'hat  he  is  a  thief,  a  cheat,  a  liar,  a 
hypocrite,  a  monster  of  ingratitude  and 
baseness,  is  all  hidden  under  the  fact  that 
he  has  assisted  the  worthy  Jayne  in  bring- 
ing a  charge  of  having  defrauded  the  re- 
venue to  the  extent  of  sixteen  hundred 
dollars  against  a  house  whose  imjwrtations 
are  every  year  worth  six  millions,  and  the 
income  of  whose  partners  is  counted  by 
hundreds  of  thousands. 

We  may  depend  upon  it  that  as  long  as 
the  national  Government  lends  its  sanction 
to  speculations  of  this  kind,  the  fountain  of 
corruption  and  dishonesty  will  not  dry  up 
or  cease  to  spread.  There  is  no  way,  we 
are  glad  to  say,  of  keeping  rascality  confined 
to  "  the  politicians."  We  cannot  make 
politics  a  lazar-house,  and  prevent  the  con- 
tamination from  reaching  trade  and  com- 
merce. Perhaps  one  of  the  alarming  signs 
of  the  times  was  that  little  burst  of  janis- 
sary's insolence  in  which  this  detective, 
Jayne,  spoke  in  his  "  report "  to  Mr.  Bout- 
well  of  the  merchants  of  New  York  as  "  the 
ordinary  brood  of  importers,"  evidently 
looking  at  them  much  as  one  of  Louis 
Fourteenth's  dragoons  looked  at  peasants, 
or  a  Mameluke  looked  at  a  ray  ah.  When 
a  person  of  his  calling  and  position  in- 
dulges in  remarks  of  this  kind  to  his  official 
superior  about  the  traders  of  tlu?  principal 
American  city,  and  the  superior  has  the 
audacity  to  ])ublish  the  letter,  we  may  be 
sure  it  is  high  time  for  the  axe  to  be  laid 
at  the  root  of  the  tree.  The  worst  charge 
that  can  be  made  against  the  house  of 
Phelps,  Dodge  «&  Co.  is  that,  having  wealth 
and  character,  they  did  not  stand  firmly  in 
the  forefront  of  the  battle  which  undoubt- 
edly must  be  fought  out  before  the  great 
Cust(mi-liouse  nuisance  is  abated,  and  the 
lesson  finally  taught  that  Government  ex- 
ists for  the  convenience  and  aid  of  the  citi- 
zen, and  not  for  his  confusion  and  annoy- 
ance. 


[From  The  CmcAGO  Daily  Tribune,  Maij  7, 1873.] 

BLACKMAILING    AND    THE    SPY 
BUSINESS. 

When  the  United  States  Government 
goes  into  the  blackmailing  business,  it  is 
very  likely  to  succeed  ;  but  it  seldom  hap- 
pens that  a  single  firm  will  pay  $271,023  as 
a  penalty  for  the  non-payment  of  $1,004  of 
customs  duties  on  a  few  scattering  ])ackages 
of  tin  plates.  That  Messrs.  Phelps,  Dotlge 
&  Co.  allowed  themselves  to  be  mulcted  in 


CONCLUDING  ARTICLES. 


75 


this  enonnous  sura  for  so  trivial  an  orror  is 
almost  as  surprising;  as  that  l\m  Govrrn- 
ment  exacted  it  from  them.  A  more  tla- 
^^rant  outrajje  was  never  committed  orsul»- 
mitted  to  in  any  country,  civilized  or  bar- 
barous. That  Messrs.  Phelps,  Dodjre  &  ('o. 
did  subtnit  to  it  can  only  l>o  accounted  for 
<m  the  scori!  of  extreme  terror  of  the  jxjvver 
and  unscrupulousness  arrayed  aj^inst  them. 
"  Anything  to  ha  rid  of  these  doffs,"  was 
probably  tlieir  despairing  cry  as  they  hand- 
ed over  the  cash.  And  yet  they  were  not 
justified  in  purchasing  their  ]X!ace  at  such 
a  price,  or  jiurcliasing  it  at  all.  They 
ought  to  have  gtmo  into  court  and  shown 
up  the  whole  conspiracy,  lx*ginning  with  a 
false-hearted  clerk,  running  the  gamut  of 
C'ust<mi-housf^  blacklegs,  spies,  antl  District 
Attorneys,  and  ending  with  a  Secretary  of 
the  Treasury  who  had  no  more  sense  of  de- 
cency than  to  aid  and  abet  the  blackmailing 
tribe  in  their  villainous  ojH'ration.  Mr. 
Boutwell  has  thus  put  a  blister  on  his  own 
reputation,  but  none  (m  that  of  Phelps, 
DiMlgc!  &  Co.  No  ]?etit  jury<m  earth  w<mld 
have  given  a  verdict  against  them  f<»r  more 
than  the  sum  of  unpaid  duties,  while  any 
gran  i  jury  would  have  felt  moved  to  indict 
the  rascally  gang  of  conspirators  who  were 
iwrsecuting  tlu'm.  Whatever  loss  of  repu- 
tati«)n  the  lirm  may  have  temjMjrarily  suf- 
fered, must  be  attributed  to  their  paymc-nt 
of  the  enormous  blacknuiil  levied  uinm 
them.  If  they  had  stoo<l  up  and  fought 
from  the  lK;ginning,  there  would  have  Ikh-h 
no  suspicion  of  thfir  guilt  in  the  minds  of 
the  public.  The  presumi  tions  would  have 
been  all  the  other  way. 

The  clerk  who  consented  to  betray  liis 
emi)loyei'S,  after  having  enjoyed  their  confi- 
dence and  assistance,  and  t<K)k  advantage 
of  tcH'-hnical  infornuilities  to  earn  an  inform- 
er's fees  at  the  hands  of  the  Uovernment, 
instead  of  reiM)rting  the  irregularities  he 
had  discovered  to  the  firm,  is,  Avithout  doubt, 
a  repulsive  object,  with  whom  no  decent 
men  will  care  to  come  in  contact.  So  are 
the  employes  of  the  Government  who,  un- 
der the  name  of  dettjctives,  brilx;  clerks  to 
betray  the  confidence  intrusted  to  them, 
suggest  ways  and  means  for  prying  into 
l)rivate  business,  entering  business  liouses 
after  dark,  and  institute  secret  censorship 
over  correspondence,  books,  and  ])apei'8. 
But  we  must  go  b.ack  of  tln'se  vampires  to 
ilnd  the  source  of  thes(j  disgraceful  prac- 
lices.  It  is  in  a  Government  that  (exacts  a 
line  of  $271,0:23  for  unintentional  irregular- 
is i«^s  that  led  to  a  loss  of  revenue  of  only 
$l,GG4,  that  the  main  cause  of  the  spy  sys- 
tem is  to  be  discovered.     The  exaction  of 


this  enormously  disproix>rtionato  fine  was 
not  intended  as  a  punishment  for  crimes, 
iK'CJiuse  the  punishment  would  be  excessive, 
and  therefore  apt  to  defeat  itself  in  the  end. 
The  sum  of  S271.023  was  exacted  at  the 
urgent  solicitation  of  the  spies  and  inform- 
ei-s,  and  with  the  pur|x>8e  of  dividing 
among  them  as  large  a  sum  as  possible,  in 
order  to  encourage  similar  outrages  in  the 
future.  This  d<x;trine  is  a  vital  part  of  the 
spy  system.  It  is  necessary  to  api>eal  to 
the  greed  for  gain,  which  is  the  most  con- 
spicuous incentive  to  corrupt  and  disgrace- 
ful ])ractices,  in  order  to  induce  men  to  soil 
their  hands  with  business  that  renders  them 
repulsive  to  decent  men  forever  after. 

The  American  Government  has  at  last 
gone  systematically  into  the  spy  business. 
It  was  ])ut  in  active  operation  last  sununer 
and  fall  in  a  political  way.  The  usurpation 
of  authority  on  tin;  part  of  United  States 
Supervisors  and  Deputy  Marshals,  under 
the  protection  of  United  States  Commis- 
sioner Daven|K)rt,  of  New  York,  was  })art 
and  j/Arcel  of  the  general  system.  The 
right  to  enter  men's  houses,  tamp«'r  with 
their  employes,  bribe  their  servant-girls, 
browl)eat  their  wives,  and  exercise  terrorism 
over  their  families,  under  the  name  of  the 
law,  in  ordtir  to  ascertain  their  ])olitical 
])references,  was  only  the  prelude  for  lx)lder 
and  more  profitable  operati<ms.  A  United 
States  law  of  r«!Cent  enactment  authorizes 
like  proceedings  with  the  pur|H^s«5  of  ascer- 
taining the  condition  of  private  business 
alfairs;  under  pretence  of  ascertaining 
whether  any  moneys  due  to  the  United 
States  at  any  former  time  have  been  unlaw- 
fully withheld.  It  cannot  fail  to  i)rtKlucc^  a 
race  of  cn^atures  as  vile  and  vicious  as  the 
harpies  of  fable.  Multitudinous  branches 
of  infamy  will  grow  out  of  it.  The  princi- 
]»le  that  underlies  the  law  and  the  ])ractice 
will  infest  all  kinds  of  business  and  the  re- 
latitms  between  man  and  man;  it  will  de- 
stroy all  commercial  confidence,  and  render 
blackmailing  a  fine  art,  in  whicli  the  vilest 
and  the  dirtiest  will  be  the  adepts. 

The  Nation  strikes  at  the  root  of  this 
rank  growth  when  it  rejH'ats  an  expression 
nuide  by  ex-Secretar}'  of  the  Treasury  Bout- 
well,  who  said  that  he  regarded  "  the  inter- 
ests of  the  Governmi'nt  and  the  interests  of 
the  merchants  as  diametrically  oi)po8ite." 
So  long  as  this  idea  prevails,  just  so  long 
will  the  spy  system  be  sustained  and  en- 
couraged. So  long  as  the  (iovernraent  con- 
tinues the  jxilicy  of  exacting  tolls  for  the 
benefit  of  privileged  classes  :  of  collecting 
revenue  by  strained  and  artificial  processes ; 
of  confusing  the  laws  in  such  manner  as  to 


TO 


THE  CASE  OF  rHELPS,  DODGE  &  CO. 


render  them  difficult  of  comprehension ; 
and  of  combining  the  interests  ot  a  political 
l)arty  with  e\cvy  branch  of  the  administra- 
tion of  Government,  just  so  long  will  the 
interests  of  the  Government  and  the  inter- 
ests of  merchants  be  "  diametrically  oppo- 
site," and  spies  and  informers  abound  in  all 
the  land.  The  existence  and  work  of  these 
peoi)le  will  act  as  important  agents  in  that 
impending?  revolution  which  Carl  Schurz 
l)ictured  in  his  speech  on  the  proposed  ex- 
pulsion of  Caldwell  from  the  United  States 
Senate,  in  which  he  reminded  his  auditors 
of  the  historic  lesson  that  corruption  must 
be  summarily  put  down  by  the  people,  or 
it  Avill  bring  them  to  speedy  and  inevitable 
ruin. 


[From  the  Anglo-American  Times,  London,  May 
17, 1873.] 

A  TALE  OF  MERCANTILE    LIFE    IN 
NEW  YORK. 

The  story  of  Messrs.  Phelps,  Dodgu3  &  Co. 
woidd  be  of  interest  to  manufactun^rs  and 
dealers  with  the  United  States  under  any 
circumstances,  but  in  itself  it  forms  so  curi- 
ous a  tale,  that  it  can  be  read  with  instruc- 
tion by  all.  We  must  preface  what  we  are 
about  to  tell  by  stating  that  the  subject  has 
been  the  cause  of  furious  news[)ai)er  discus- 
sion, official  discussion,  and  mercantile  dis- 
cussion ;  tlie  majority  of  the  papers  assailing 
the  firm  in  unmeasured  terms,  which,  by 
the  way,  is  conspicuous  from  its  high  rank 
and  long  standing,  as  well  as  from  the  rec- 
ord of  its  senior  partner,  one  of  the  most 
esteemed  citizens  of  the  Union.  Last  sum- 
mer a  contract  was  entered  into  with  Euro- 
pean manufacturers  for  the  purchase  of  the 
whole  output  of  a  certain  metal  fabrication 
involving  a  large  amount  of  capital  and 
risk.  A  partner  was  sent  on  this  business 
to  Europe,  and  the  negotiation  was  of  course 
strictly  confidential.  The  firm  was  waited 
upon  when  its  arrangements  had  been  thus 
far  completed,  by  a  competitor  who  dis- 
played a  full  acquaintance  with  all  the  de- 
tails, and,  demanding  a  participation  in  the 
enterprise,  said  he  would  "  burst  the  whole 
business  if  denied."  The  demand  and  the 
threat  were  resented,  but  as  they  were  reit- 
erated in  Europe,  searching  inquiries  were 
made,  when  it  transpired  that  certain  metal- 
brokers  and  others  were  in  the  habit  of  in- 
specting the  letter-books  and  invoices  of  the 
finn  at  night,  getting  their  admission  there- 
to by  dishonest  clerks  and  watchmen.  On 
a  reference  to  the  law  it  was  found  that  no 
criminal  charge  could  be  sustained,  as  the 


admission  was  through  the  agents,  and 
nothing  had  been  feloniously  removed  from 
the  premises.  Among  those  concerned  was 
a  young  man  whom  they  had  taken  into 
employment  in  charity  ;  had  been  educated 
in  the  house,  and  finally  promoted  to  be  as- 
sistant invoice  clerk,  lie  had  got  access  to 
the  store  at  night  on  tlu;  i)lea  of  posting  up 
arrears;  and  foreseeing  that  the  investigation 
would  lead  to  his  dismissal,  like  the  unjust 
steward  he  took  steps  to  secure  his  future 
position  at  the  ex])ense  of  his  employers. 
As  assistant  invoice  clerk  he  was  aware  of 
irregularities  in  certain  invoices,  and  hav- 
ing stolen  these,  he  put  himself  into  com- 
munication with  the  Custom-house  officials, 
instead  of  informing  his  masters.  Before 
submitting  them  to  the  officials,  the  case 
against  the  firm  was  drawn  up  by  lawyers 
of  high  standing,  to  be  placed  in  the  hands 
of  Custom-house  detectives.  The  object  of 
the  clerk  was  to  secure  the  portion  of  the 
fine  which  would  be  imposed,  one-fourth, 
and  the  result  proved  that  his  calculation 
was  correct,  for  he  pocketed  upwards  of  ten 
thousand  guineas ; — but,  let  us  glance  at 
the  way.  The  statutes  of  the  United  States 
are  piled  into  a  complicated  and  confused 
mass  from  the  beginning  of  the  century  ;  so 
confused,  that  but  few  men  in  the  Union 
fully  understand  the  code,  and  it  would 
take  a  lifetime  to  comprehend  its  require- 
ments, provisions,  limitations,  and  interpre- 
tations. To  confound  confusion,  this  code 
requires  invoices,  certificates,  and  d(!clara- 
tions  in  triplicate  of  shippers,  consuls,  own- 
ers, and  consignees,  in  respect  of  cost, 
market  values,  freights,  charges  and  com- 
missions. But  the  Government  may  set  all 
this  aside,  and  assess  on  the  judgment  of 
appraisers.  After  their  decision  has  been 
accepted  by  Government  and  merchant,  the 
goods  delivered,  sold  and  consumed,  the 
Government  practices  the  right  at  discre- 
tion of  referring  the  transaction  back,  if 
within  five  years,  for  further  adjudication, 
for  in  the  case  of  Phelps,  Dodge  &  Co.  this 
was  actually  done.  Further,  it  is  asserted 
that  where  the  duty  is  per  pound,  per  yard, 
or  ])er  dozen,  without  reference  to  the  value 
of  the  article  measured,  yet,  if  the  invoice 
does  not  correctly  stale  the  value,  the  goods 
are  liable  to  confiscation.  Nay,  more.  In 
the  matter  of  some  South  African  diamonds, 
forwarded  to  the  care  of  the  Collector  for 
appraisement,  instead  of  the  owner  or  con- 
signee, the  absence  of  an  invoice  giving  de- 
tails unknown  to  any  one,  even  the  finder 
of  the  diamonds,  was  held  to  render  the 
goods  liable  to  forfeiture,  and  proceedings 
for    forfeiture    were    actually    instituted. 


CONCLUDING  ARTICLES. 


77 


Messrs.  Phelps,  Dod^e  &  Co.  publislietl  a 
statement  showinjj:  the  dilBculties  under 
which  tlie  iiniK)rter  labors,  and  an  extraor- 
dinary comnientary  on  the  Government  it 
is,  considering?  that  the  ^reat  Republic 
holds  itself  to  be  the  leading  trading  com- 
munity, and  optnily  declares  its  design  to 
make  this  ]M)rt  of  New  York,  where  these 
obstructive  regulations  exist,  the  first  em- 
|M)rium  in  the  world,  commercially  and 
financialiy.  We  beMcve  it  was  Sidney 
Smith  who  saiil  that  a  Hishop  would  have 
to  be  sacrificed  befori;  public  attention  could 
l)e  attracted,  and  a  reform  instituted  ;  and 
it  is  probables  that  the  sacrifice  of  this  lead- 
ing American  firm  may  be  needed  to  com- 
mence the  reformation  so  much  nee<led  in 
the  Custom  house  of  New  York  ;  for  this 
business  has  assumed  a  black  mailing  char- 
act(^r,  conceived  in  dish(mesty,  commenced 
in  dishonesty,  continued  and  ended  in  dis- 
honesty. With  such  a  complicated  c«Hle, 
with  regulations,  and  a  procedure  api)ar- 
ently  framed  to  entrap  any  iminirter  wliom 
an  official  might  desin^  to  trip  u|),  we  have 
politics  so  intertwin<'<l  that  the  m«)tive  may 
come  from  a  proc  '('(ling  utterly  uncotuicct- 
ed  with  the  meichant's  business.  Wlu-n 
the  Custom-house  was  on  the  trial  into 
which  the  Executive  luul  Ixhmi  lashwl  by 
the  pr>>8S  after  Mr.  Mur[>hy  Jiad  been  made 
('ollector,  the  gt'ntleman  who  gave  the 
most  (lamau:inir  evidence;  against  it  was  Mr. 
William  E.  Dodge,  who  emphatically  as- 
sert;'d  that  the  extortions  of  the  (Jeneral 
Order  Ston'keeixjrs,  and  others  ct^nnected 
with  the  (' us  to  m- ho  use,  had  made  New 
York  the  most  expensive  jwrt  in  the  whole 
world.  'JMuvt was astatement t) be wi]x»d out 
only  in  blood.  It  was  a  bomI)shell  expl«)ded 
in  the  nest  of  c  >rrui)tion,  and  it  remains  on 
record,  a  remark  frecjuently  refiTred  to  both 
in  debates  in  Congress  and  discussions  in 
the  press.  To  add  to  the  Custom-house 
grievance,  the  name;  of  Phelps,  Dodge  &  Co. 
headed  the  petition  of  100  New  York  mer- 
chants for  the  redress  of  certain  grievances; 
and  the  injury  which  luis  been  done  to  the 
firm  is  all  the  more  marked  from  the  fact 
that  Mr.  Dodg(!  threw  all  his  great  infhu'uce 
into  the  Grant  ])olitical  scale  during  the 
campaign ;  a  service,  however,  which  ap- 
pears to  have  failed  in  i)ropitiating  that 
section  of  the  party  headed  by  the  New 
York  Custom-house.  To  make  the  case 
complete,  not  only  had  the  Custom-house  to 
make  an  example  for  the  injuries  it  had 
sustained,  Imt  the  officials  were  incited  to 
this  course  by  a  direct  gain,  two  ])er  cent,  of 
the  fine  being  awarded  to  certain  of  their 
number.     Thus  we  have  a  Government  pil- 


ing up  obstructions  at  the  entrance-gate  of 
its  domain  ;  making  it  the  interest  of  its 
officials  to  knock  down  and  rob  any  of  its 
customers  who  nuiy  be  caught  stumbling 
over  one  of  these  obstructions;  and  who, 
not  content  with  the  intricate  obstacles, 
throw  in  political  considerations  to  blind  to 
the  path  of  virtue,  and  endeavor  to  drive 
those  determiniKl  to  enter,  into  the  i)ath  of 
fmud.  At  the  same  time  we  have  this  very 
Government  i)ublicly  declaring  New  York 
to  Ik*  the  freest  and  most  open  |)ort  in  the 
world,  inviting  mankind  to  make  it  the 
great  deiwlt  of  the  globe,  and  predicting  for 
it  a  future  which  is  to  constitute  it  the  mar 
vel  of  the  planet. 

The  articles  which  the  firm  were  allege<l 
to  have  undervalutnl  wen*  tin  and  tin  plates, 
the  duties  on  which  were  ad  vahtrem.  A 
rigid  investigation  by  the  District  Attorn»'y 
and  8|K'cial  agents,  develoiHid  the  fact  that 
the  Government  had  lost  by  undervaluation 
a  sum  of  !fl.(K)l,  while  it  had  gained  in 
other  ciistw  more  than  sufficient  to  cover  that 
annmnt.  Thisinciuiry  led  Mr.  Davis,  the  Dis- 
trict Attorney,  to  the  conclusion  that  "the 
idea  of  defrauding  the  (iovernment  of  its 
lawful  duties  had  neviT  entered  into  the 
minds  of  the  above  firm."  But  Mr.  S|)ecial 
Agent  Jaync  had  another  aird  to  play  ;  for 
he  had  to'  work  for  his  two  \^t  c«!nt.  If  tin; 
firm  fought  the  Government  in  the  courts 
of  law,  there  was  every  chance  that  the 
(Jovernment  would  bt;  defeated,  and  where 
then  wouhl  be  Mr.  S|M'cial  Agent  Jayne's 
two  ]X}r  cent.?  He  strongly  advis«.'d  the 
Secretary  to  take  the  sum  the  house  was 
willing  to  pay,  on  the  plea  "  that  it  was 
enormous,  in  comparison  with  the  amount 
of  undervahiati<m,  so  enormous  that  it 
would  be  exceedingly  difficult  to  obtain  a 
verdict  for  the  amount  claimed."  Why  did 
this  lirni,  the  chief  ]>artner  of  which  has 
just  Ijeen  re  elected  President  (if  the  New 
York  Chamber  of  Commerce,  accept  the 
compromise  pro|)osed,  paying  ^371,000,  un- 
der such  circumstances?  Why  did  one  of 
the  partners,  we  may  ask,  give  the  damag- 
ing evidence  before  the  Congressional  Com- 
mittee on  the  Custom-house?  They  had 
brought  uiMMi  th(^m  the  enmity  of  a  body  in 
whose  ])ower  they  were  inade  to  feel  they 
were.  They  had  be«'n  mad<?  to  feel  that  the 
ways  of  fraud  were  tin;  ])leasant  ways  in 
their  metro])olis  ;  and  they  had  been  sharply 
corrected  when  they  were  caught  bungling 
over  the  obstructions  on  the  paths  of  recti- 
tude. To  fight  the  Custom-house  was  to 
destroy  their  business ;  the  sum  tliey  re- 
garded as  blackmail,  and  as  blackmail  they 
paid  it. 


APPENDIX 

[Sec  page  53.] 


THE  OFFICIAL  CORRESPONDENCE. 


Washington,  April  27.— The  following  is  ihc  cor- 
respondence, from  the  files  of  the  Treasury  Depart- 
ment, in  relation  to  the  case  of  Phelps,  T)tKlj;e  &  Co. : 
[A.— Incloiure.) 


Custom-house,  New-Yokk, 
Surveyor's  Offick,  Jan. 


1873-  )" 


//o/i.  CJeokge  S.  Boutweli.,  Sec" y  0/ the  Trcoiury. 

Sir: 

I  herewith  inclose  detailed  report  of  result  of 
examination  of  the  books  and  pajwrs  of  I'helps,  Do<lt^c 
<t  Co.,  importers  of  metals,  doing  business  in  this 
city.  I  have  endeavored  to  make  this  statement  as 
intelligible  as  jjossible,  but  the  large  sum  involved 
in  the  suit  that  has  lieen  instituted,  and  the  long  and 
favorable  standing  of  the  house,  must  be  my  justifica- 
tion for  explaining  at  more  length  than  usual  the 
exact  character  of  the  fraud,  and  the  character  and 
extent  of  the  proof. 

According  to  ordinary  modes  of  reasoning,  a  house 
of  the  wealth  and  standing  of  Phelps,  Dodge  &  Co. 
would  be  above  the  inlluenccs  that  uiduce  tne  ordin- 
ary brood  of  importers  t*j  commit  fraud.  That  same 
wealth  and  standing  becomes  an  almost  impenetrable 
armor  against  suspicion  of  wrong  doing,  and  diverts 
the  attention  of  the  ofl'iccrs  of  the  Government,  pre- 
venting that  scrutiny  which  they  give  to  acts  of  other 
and  less  favored  importers.  It  would  require  more 
than  mere  suspicion  to  justify  a  customs  oflicer  in 
questioning  the  truth  of  the  declaration  under  oath  of 
a  member  of  this  firm  before  the  United  States  Consul, 
that  an  invoice  of  merchandise  purchased  by  this 
house  and  consigned  t<^  them  was  in  all  respects  true, 
that  it  represented  the  actual  prices  paid  with  all 
charges  thereon,  that  no  other  or  different  invoice 
had  been  or  would  be  furnished  to  any  one.* 

It  would  for  the  same  reason  require  almost  positive 
proof  to  justify  a  suspicion  that  the  members  of  this 
firm  did  not  swear  to  the  truth  when  they  made  entry 
of  these  goods,  and  solemnly  declared  on  oath  that  no 
other  or  different  invoice  have  been  received  by  them, 
and  that  the  invoice  produced  represented  the  true 
purchase  price,  and  was  in  all  respects  true,  and  that 
if  any  other  or  different  invoice  or  account  was  received 
by  them  they  would  immediately  notify  the  Collector 
of  that  fact,  and  the  officer  that  should  have  the  tem- 
erity to  proceed,  without  the  most  positive  proof,  to 
charge  this,  or  any  other  house  of  like  standing,  with 
having  failed  to  comply  with  the  law  in  these  most 
essential  particulars,  must  expect  to  bring  upon  him- 
self a  shower  of  deserved  odium. 

Feeling  most  keenly  the  requirements  of  the  situation, 
I  proceeded  with  the  investigation  in  this  case  with 


great  caution,  but  having  in  my  possession  certain' 
papers  purix)rting  to  be  copies  of  invoices  from  the 
manufacturers  f>f  these  goods,  giving  the  sizes,  kinds, 
and  qualities,  with  shipping  marks,  dates,  and  numi>er 
of  pack-iges,  I  pnxreeded  to  compare  them  with  the 
Custom-Housc  papers  on  file  and  found  them  to  agree 
in  every  case  in  the  following  particulars  :  In  numlier 
of  iKickages,  in  marks,  in  si/cs,  and  kinds  of  goods, 
in  all  the  .•subdivisions  that  distinguished  the  different 
sizes  and  qualities  under  the  different  marks  with  the 
number  of  pjickages. 

First,  establishing  beyond  all  question  the  identity 
of  the  g(x)ds  ;  scctmd,  that  these  papers  were  different 
invoices  of  the  s:ime  gocnls.  These  invoices  differed 
from  those  in  the  Custom-House  in  the  following  par- 
ticulars, viz. :  In  the  prices  paid,  the  difference  \y&v 
package  being  from  three  pence  to  four  shillings  ster- 
ling; in  omitting  in  many  case^  the  additional  charge 
per  pack.ige  from  the  Custom-House  invoice ;  in 
omitting  from  the  Custom-Mouse  or  consular  invoice 
the  cost  of  transportation  from  Wales,  the  place  of 
delivery,  to  Liverixjol,  the  place  of  shipment. 

In  other  words,  the  identity  of  the  goods  being  es- 
tablished, and  the  genuineness  of  these  pajjcrs  as 
invoices  in  the  possession  of  the  firm  being  established, 
this  firm  had  deliberately  violated  every  provision  of 
the  law  of  1863  now  governing  the  invoicing  and  en- 
tering of  im^x)rted  merchandise  pitying  ad  valorem 
duty.  By  diligently  comparing  these  irapcrs  with 
their  invoicL*soii  file  they  were  found  to  be  in  the  same 
handwriting  of  their  Custom-House  invoices,  and  I 
had  reason  to  Ijelieve  that  a  systematic  fraud  had 
been  perpetrated. 

I  therefore  called  Judge  Noah  Davis,  the  then 
United  Slates  Attorney,  to  my  office  to  go  over  the 
papers  with  me,  and  he  fully  concurred  in  my  belief 
that  a  fraud  had  been  committed,  and  assisted  me  in 
prtH;uring  a  warrant  for  the  seizure  of  their  books  and 
papers.  After  pro«:uring  the  warrant,  however.  Judge 
Davis  suggested  that  he  come  to  my  office  and  send 
for  the  members  of  the  firm,  and  say  to  them  that  if 
they  would  deliver  such  books  as  I  might  indicate  he 
would  not  have  the  warrant  served.  '1  his  course  was 
pursued,  and  they  delivered  to  me  such  books  as  I 
asked  for.  Upon  examination  of  their  invoice  books 
exact  fac  siviile  invoices  of  those  in  the  Custom- 
House  were  found,  to  which  was  found  attached  in 
many  instances  other  invoices  similar  in  character 
to  those  hereinbefore  described. 

This  certainly  brought  the  knowledge  of  the  fraudu- 
lent transaction  directly  home  to  the  members  of  the 
firm,  and  to  each  one  guided  by  the  invoice  price 
either  in  .selling  the  goods,  making  up  the  accounts,  or 
in  conducting  the  financial  transactions  of  the  house. 
The  only  escape  and  only  answer  that  could  be  mad^ 


80 


APPENDIX. 


was  that  Phelps,  Dodge  &  Co.,  in  the  transaction  of 
their  enormous  business,  knew  nothing  of  the  import 
or  meaning  of  the  oath  taken  Ijeforc  the  U.  S.  Consul 
at  Liverpool,  knew  and  realized  nothing  of  the  nature 
of  the  oath  taken  almost  daily  by  some  member  of  the 
tirm  on  entering  their  goods,  knew  nothing  of  the  law 
enforced  so  vigorously  and  relentlessly  against  their 
'ess  favored  neighbors.  I  n  fact,  they  have  done  busi- 
ness in  New-York,  knowing  and  caring  nothing  for 
the  laws,  or  they  have  deliberately  and  systematically 
disregarded  and  defied  the  law  with  intent  to  defraud 
the  Government. 

The  total  value  of  the  invoices  examined  amounted 
to  about  one  and  three-ijuarters  of  a  million  of  dollars, 
and  this  amount  is  plainly  and  certainly  forfeited  to 
the  United  States  by  the  statute  of  1863  ;  not  by  any 
technical  construction  or  far-fetched  interpretation, 
but  by  deliberately  and  systematically  stating  the 
cost  of  their  goods  below  the  purchase  price  by  a  false 
invoice,  made  false  for  no  conceivable  reason  but  to 
lessen  the  duties  to  be  paid  to  the  United  States. 

Forfeited  for  not  doing  the  things  commanded  by 
the  statute,  and  which  the  law  made  it  their  duty  to 
do. 

Forfeited  for  doing  what  the  statute  in  express  terms 
forbids  their  doing. 

P'orfeited  because  they  did  defraud  the  United  States. 

Forfeited  because  no  explanation  can  be  given  or 
motive  found  for  systematically  understating  the 
cost  of  their  goods,  and  thus  defrauding  the  United 
States,  except  that  they  did  intend  to  defraud  the 
United  States. 

If  the  excuse  or  pretense  that  they  acted  in  ignorance 
of  the  law  can  be  made  to  serve,  then  the  plea  of  igno- 
rance may  be  interposed  in  any  case,  and  the  intent 
can  never  be  inferred  from  any  act,  and  the  first  ele- 
ments of  reasoning  are  set  at  naught  in  the  search  for 
some  motive  that  will  explain  why  they  made  the  two 
sets  of  invoices. 

The  items  proven  in  these  several  invoices  to  be  un- 
dervalued, when  taken  separately,  amount  to  about 
$275,000. 

The  percentage  of  loss  on  the  whole  amount  is, 
therefore,  small,  yet  the  importations  of  the  house  are 
very  extensive,  and  if  the  same  or  nearly  the  same 
percentage  of  fraud  extends  through  their  importations, 
other  than  those  included  in  the  statement,  and  on 
which  we  have  positive  proof,  the  entire  loss  to  the 
Revenue  must  have  been  some  $10,000  or  $15,000  per 
year,  perhaps  more. 

He  this  as  it  may,  the  evidence  on  these  invoices  is 
conclusive.  I  have  the  honor  to  be,  very  respectfully, 
your  obedient  servant, 

B.  G.  JAYNE,  S/eczal  Agent. 


[B. — One  inclosurc.) 

Office  of  the  Distuict-Attorney  of  the 
United  States  fok  the  Southern  District 
OF  New  York,  New-York,  Jan.  2,  1873. 

IIoM.  E.  C.  Bankield,  Solicitor  0/  the  Treasury. 

Sir: 

I  herewith  transmit  an  offer  of  compromise  made 
on  bchalf-of  Phelps,  Dodge  &  Co.,  in  the  suit  of  the 
United  States  against  themselves.  The  suit  is  brought 
to  recover  noiinnally  $1,000,000,  though  the  detailed 
statement  furnished  me  discloses  a  few  thousand  dollars 
less. 

The  charge  is  for  violations  of  the  first  section  of 
the  act  of  Congress  of  March  3,  1863. 

The  facts  in  the  case  are  as  follows  :  Acting  upon 
information  received  by  him.  Special  Agent  Jayne 
applied  about  a  week  since  for  a  warrant  to  seize  the 
books  and  papers  of  the  defendants.  My  predecessor, 
after  a  careful  examination,  deemed  it  a  proper  case 
for  the  issue  of  a  warrant,  buf  *^fore  it  was    served 


sent  for  the  senior  member  of  the  house,  and  he  vol- 
untarily produced  the  books,  though  one  of  the  junior 
partners  attempted  to  keep  back  the  one  book  which 
was  especially  desired,  Ijeing  one  containing  invoices 
and  memoranda.  An  examination  showed,  what  was 
believed  before,  that  the  defendants  had  committed 
two  apparently  distinct  species  of  fraud.  One  of  these 
consisted  in  invoicing  tin  shipped  from  Liverpool  at 
the  price  paid  for  it'  in  Wales.  There  were  with  the 
invoices  brief  memoranda  stating  that  fact  in  terms, 
the  meinoranda  being  sent  by  the  Liverpool  house, 
always  in  the  same  handwriting,  and  stating  expressly 
"  We  invoice  them  to  you  at  the  prices  paid  in  Wales, 
or  words  to  that  effect.  There  is  at  hand  no  means 
of  showing  the  amount  of  undervaluation  on  this  ac- 
count, or  we  have  no  proof  of  the  cost  of  such  trans- 
portation. The  other  species  of  fraud  consisted  in 
trifling  undervaluation  of  some  single  item  or  class  of 
items,  in  an  invoice  in  which  most  of  the  items  were 
correct.  There  are,  however,  one  or  two  instances  in 
which  a  whole  invoice  seems  to  have  been  underval- 
ued. 

There  is  no  actual  evidence  of  any  fraud  in  either 
class  prior  to  January,  1871.  The  books  neither  before 
nor  since  contain  any  evidence  of  fraud,  but  it  is  found 
in  the  memoranda  already  referred  to  and  in  duplicate 
(true)  invoices.  If  these  ever  existed  for  the  importa- 
tions prior  to  about  January,  1871,  they  have  been 
destroyed.  The  informer  asserts  that  the  frauds  have 
extended  over  several  years,  and  there  is  considerable 
indirect  proof  that  this  is  so  in  the  similarity  of  rates 
before  and  since  January  1871,  the  invoices  showing 
the  same  prices  before  1871  in  the  classes  of  goods 
which  are  shown  to  have  been  undervalued  since  that 
time. 

Of  invoices  entered  since  early  in  1871  which  are 
tainted  with  fraud  the  total  value  is  $1,726,060.  The 
items  in  these  invoices  in  which  undervaluations  occur 
amount  to  $271,  017  23,  while  the  amount  of  under- 
valuation is  $6,658  78.  The  total  amount  of  duties 
lost  to  the  Government  was  $1,664  ^S-  "1  he  total 
importations  of  the  defendants  are  about  $6,000,000  a 
year. 

While  the  investigation  was  going  on  various  pro- 
posals of  compromise  were  made,  but  none  of  them 
were  such  that  the  Collector  deemed  it  worth  while  to 
hold  out  any  hope  that  they  would  be  accepted,  though 
I  think  that  my  predecessor  was  disposed  to  advise  the 
acceptance  of  a  considerably  smaller  sum  than  that 
now  offered.  I  was  personally  cognizant  of  the  whole 
proceedings,  but  took  no  active  part  in  them  until 
after  I  had  taken  my  oath  of  office.  I  yesterday  de- 
voted considerable  time  to  the  examination  of  the 
papers. 

After  careful  consideration  I  have  decided  to  recom- 
mend the  acceptance  of  the  compromise  offered.  I 
am  influenced  to  this  course  by  the  fact  that  the 
nominal  amount  claimed  is  so  enormous  in  comparison 
with  the  amount  of  undervaluation  and  fraud  that  I 
believe  it  would  be  exceedingly  difliciilt  to  obtain  a 
verdict  for  the  amount  claimed.  The  smallness  in 
amount  of  the  fraud  also  makes  the  amount  offered  an 
adequate— perhaps  an  extraordinary— punishment  for 
the  offense  committed.  The  proposal,  therefore,  seems 
to  me  to  secure  the  two  things  that  should  be  required, 
an  adequate  sum  to  punish  the  offenders  and  a  pay- 
ment into  the  Treasury,  not  only  of  the  amount 
diverted  from  it,  but  of  as  large  a  sum  as  it  is  probable 
that  litigation  would  secure. 

I  am  a  little  sorry  that  my  first  formal  ofhcial  act 
should  be  to  recommend  a  compromise  for  a  sum  which 
seems  so  much  smaller  than  the  amount  the  Govern- 
ment could  justly  claim.  In  the  recommendation  I 
make  1  have  the  concurrence  not  only  of  the  officers 
of  Customs,  but  of  my  experienced  predecessor. 

Your  obedient  servant, 

GEORGE  BLISS,  Jr., 

U.  S.  Att'y,  S.  Dist.  N.  Y. 


AM'EKDlX. 


81 


|C.— lirsl  fropoMl.] 

New-York,  Jan.  2,  1873. 

To  Geo,  Bliss,  Jr.,  Esq.,  U.  S.  District-Attorney 
for  the  Southern  District  0/  Ne^v-York. 
Sir: 
As  the  attorneys  of  Messrs.  Phelps,  Dodee  &  Co., 
in  the  suit  of  the  United  States  against  Wm.  r2.  Dodge 
and  others  :oniprising  the  said  firm,  this  day  instituted, 
for  a  claim  of  $1,000,000  for  alleged  violations  of  the 
Revenue  laws  of  the  United  States  in  relation  to  the 
importation  of  merchandise,  and  particularly  the 
provisions  of  the  first  section  of  the  act  of  Congress 
approved  March  3,  1863,  in  respect  of  the  entry  of 
certain  importations  of  merchandise  within  and  during 
the  five  years  last  past,  we  are  instructed  by  our  clients 
— while  protesting  that  no  fraudulent  intent  has  ever 
been  entertained  by  them  toward  the  Revenue  of  the 
United  States  in  any  of  their  acts  respecting  said  or 
any  importations  made  by  them — to  oner  in  compro- 
mise and  settlement  of  the  said  claim  of  the  United 
States  in  the  said  suit  the  sum  of  $260,000  in  United 
States  currency,  on  the  sole  ground  that  there  may 
have  been  acts  in  connection  with  the  entry  of  the 
said  importations  in  violation  of  the  provisions  of  the 
.said  statutes  and  rendering  it  proper  that  such  an  offer 
as  the  above  should  be  made.     Yours,  &c,, 

WAKEMAN  &  LATTING, 
Attorneys  for  the  Defendants. 
William  Fullerton,  of  Counsel. 


Hon. 


ID.; 
CusTOM-HousE,  New-York,  Jan.  6,  1873. 

E.  C.   Banfibld, 

Solicitor  of  the   Treasury  Department. 


Sir: 
Suit  was  instituted  against  the  firm  of  Phelps, 
Dodge  &  Co.,  for  the  recovery  of  $1,000,000  currency, 
being  the  value  of  certain  invoices  of  merchandise  im- 
jKjrted  by  them  in  violation  of  the  first  section  of  the 
act  of  March  3,  1863.  The  defendants  offer  the  sum 
of  $260,000  to  compromise  the  suit.  I  would  recom- 
mend the  acceptance  of  this  offer  for  the  following 
reasons : 

First :  This  sum  will  more  than  reimburse  the 
Government  for  any  probable  loss. 

Second :  This  firm  is  composed  of  a  large  numlier 
of  members,  and  the  uncertainty  of  all  human  affairs, 
when  taken  in  connection  with  the  unavoidable  delays 
of  the  law,  is  of  itself  a  strong  argument  in  favor  of 
acceptance. 

Third:  The  purpose  and  intent  of  the  law  will 
have  been  complied  with. 

Very  respectfully,  your  obedient  servant, 

B.  G.  ] AYHE,  S/ccinl  A ^ent. 


[E.— Second  prnposal.] 

New-Yokk,  Jan.  2,  1873. 

George   Bliss,  7r.,  Esq.,  U.  S.   Attorney  for  the 

Southern  District  of  New-  York. 

Sir: 

Whereas,  a   suit  has   been   commenced  this  day 

against  William  K.  Dodge  and  others,  composing  the 

firm  of  Phelps,  Dodge  <!fe  Co.,  to  recover  damages  or 

penalties  in  the  alleged  sum  of  $1,000,000,  for  certain 


alleged  violations  of  the  Revenue  laws  of  the  United 
States  ;  and  whereas  there  are  certain  invoices  of  im- 
portations entered  into  the  Custom-House  by  said 
company  between  the  first  day  of  January,  1868,  and 
the  first  day  of  January-,  1873,  which  are  claimed  by 
the  United  States  to  have  been  in  violation  of  the 
Revenue  laws  of  the  United  States. 

Now  for  the  adjustment  and  a  compromise  of  all 
claims  arising  out  of  violations  of  the  Revenue  laws 
of  the  United  .States  between  said  dates,  and  in  settle- 
ment thereof,  the  mercantile  firm  of  Phelps,  Dodge  & 
Co.,  b>r  their  attorneys,  hereby  offer  to  compromise 
said  suit  and  all  violations  of  said  Revenue  laws,  by 
entry  and  payment  of  a  judgment  in  said  suit  in  favor 
of  the  United  States  for  the  sum  of  $260,000  in  cur- 
rency without  costs,  which  sum  is  hereby  offered  and 
is  to  be  received  by  the  Government  in  full  compromise, 
satisfaction  and  payment  of  all  duties,  penalties  and 
forfeitures  for  said  or  apy  violations  of  the  laws  of  the 
United  States  by  said  Phelps,  Dodge  &  Co.,  between 
said  dates. 

WAKEMAN  &  LATTING, 
Attorneys  for  said  firm  and  defendants. 

William  Fullerton,  Hbnry  Knox,  of  Counsel. 


[The  roUowing  is  the  indorsement  on  the  foregoing 
letter : 

This  second  offer  was  presented  to  me  by  the  Counsel 
of  P.,  D.  &  Co.,  Jan.  25,  and  was  verbally  rejected, 
and  after  a  long  conference  I  intimated  that  I  would 
recommend  an  offer  in  which  the  release  should  be 
limited  to  such  frauds  as  were  embraced  in  Mr.  J.-wnc's 
reports,  if  the  U.  S.  Attorney  should  concur. — E.  C. 
B.] 


CXLIX. 


[E.  (S)-Telc9nini.] 

New- York,  Jan.  29,  1873. 


Solicitor  Banfield,  Treasury  De/>artment,   Wash- 
ington : 

The  circumstances  under  which  our  proposal  of 
compromise  was  made  having  enlirely  cnanged,  we 
have  notified  the  Secretary  ot  the  'I'rcasury  that  we 
have  withdrawn  the  offer  made  by  our  attorneys. 

PHELPS,  DODGE  &  CO. 


IF.] 

Office  of  the   District-Attorney  of  the     i 

United  States  for  the  Southern  District  of   V 

New-York.  New-York,  Feb.  8,  1873.  S 

Hon  E.  C.  Banfield,  Solicitor  of  the  Treasury. 
Dear  Sir: 

I  beg  to  transmit  herewith  a  copy  of  proposition 
of  compromise  made  by  Messrs.  Phelps,  Dodge  &  Co., 
for  the  settlement  of  the  suit  of  the  United  States 
against  them.  The  proposal  is,  I  understand,  in  the 
form  which  met  the  approval  of  the  Department  prior 
to  the  withdrawal  of  the  original  proposition.  I  have 
no  hesitation,  for  the  reasons  heretofore  given  by  me 
with  reference  to  the  prior  proposition,  in  recommend- 
ing the  prompt  acceptance  of  this  offer.  I  beg  to  say 
that  I  hold  on  deposit,  subject  to  the  acceptance  of 
the  offer  by  the  Department,  checks  for  the  amount 
proposed.     Very  respectfully,  your  obedient,  servant, 

GEO.  BLISS,  Jr.,  U.  S.  Attorney. 


82 


APPENDIX. 


[G.— Third  Proposal.] 

New  York,  Jan.  2,  1873. 

Geo,  Bliss,  Jr.,  Esq.^  U.  S.  Attorney  for  the  South- 
ern District  of  Neiv-York. 
Sir: 
Whereas  a  suit  has  been  commenced  this  day 
.against  William  E.  Dodge  and  others,  composing  the 
firm  of  Phelps,  Dodge  &  Co.,  to  recover  damages  or 
penalties  in  the  alleged  sum  of  $1, 000,000  for  certain 
alleged  violations  of  the  Revenue  laws  of  the  United 
States ;  and  whereas  there  are  certain  invoices  of  irn- 
portations  entered  into  the  Custom-House  by  said 
company,  between  the  first  day  of  January,  1868,  and 
the  first  day  of  January,  1873,  which  are  claimed  by 
the  United  States  to  have  been  in  violation  of  the 
Revenue  laws  of  the  United  States.  Now  for  the  ad- 
justment and  compromise  of  all  claims  arising  out  of 
violations  of  the  Revenue  laws  of  the  United  States 
between  said  dates,  and  in  settlement  thereof,  the 
mercantile  firm  of  Phelps,  Dodge  &  Co.,  by  their 
attorneys,  hereby  offer  to  compromise  said  suit  and 
all  violations  of  said  Revenue  laws  by  entry  and  fjay- 
ment  of  a  judgment  in  said  suit  in  favor  of  the  United 
States,  for  the  sum  of  $271,017  23  currency,  without 
costs,  which  sum  is  hereby  offered  and  is  to  be  received 
by  the  Government  in  full  compromise,  satisfaction, 
and  payment  of  all  duties,  penalties,  and  forfeitures 
for  said  or  any  violations  of  the  laws  of  the  United 
States  by  said  Phelps,  Dodge  &  Co.  between  said 
dates. 

WAKEMAN  &  LATTING, 

Attorneys  for  Defendatits. 

Wll.I.lAM   FULLERTON  of  CoUUSel. 


[H.] 


Office  of  B.  G.  Javne,  Special  Agent  of  the  | 
Treasury  Department,  Custom-House, 


U.S. 


New-York,  Feb.  8,  1873. 


Hon.  E.  C.  Banfield,  Solicitor  of  the  Treasury. 
Sir: 

Messrs.  Phelps,  Dodge  &  Co.  submit  a  new  offer 
to  the  Department.  They  offer  the  sum  of  $271,017  23 
to  compromise  the  suit  of  the  Government.  This 
goes  forward  with  the  recommendation  of  the  United 
States  attorney.  The  offer  is  the  same  in  form  .as  the 
one  before  submitted.  The  amount  is  the  value  of 
the  items  undervalued  in  all  the  invoices  so  far  as  we 
can  trace,  including  two  invoices  entire,  where  the 
undervaluation  consists  in  leaving  off  about  $1,000 
dutiable  charges.  I  am  decidedly  in  favor  of  the  ac- 
ceptance <»f  this  offer. 

Very  respectfully,  your  obedient  servant, 

B.  G.  JAYNE,  special  Agent. 


[I.— Private] 


New-York,  Feb.  8,  1873. 
The  Hon.  Geo.  S.  Boutwell,  Washington. 
Mv  Dear  Sir: 

As  the  attorneys  of  my  firm  have  renewed  an  offer 
for  compromise,  I  deem  it  proper  to  advise  you  of  the 
reasons  of  this  step.  On  the  first  notice  being  given 
us  that  through  misapprehension  of  the  Revenue  laws 
we  had  violated  some  of  its  provisions,  we  offered  on 
consultation  with  officers  of  the  customs  here,  to  select 
out  the  items  from  the  various  invoices  which  they 
claimed   had   been   undervalued,  and   to   pay  to  the 


Government  their  total  amount.  This,  however,  was 
modified  to  a  roimd  sum  estimated  to  cover  same.  As 
there  was  long  and  unexpected  delay  in  acting  upon 
this  offer,  and  our  motives  were  likely  to  be  misappre- 
hended, we  concluded  to  withdraw,  and  so  advised 
you.  We  find,  however,  which  we  did  not  then  know, 
that  you  had  already  approved  of  the  proposed  settle- 
ment, and  it  was  considered  as  settled  by  the  officers 
of  the  Government  here.  They  felt  that  our  with- 
drawal at  so  late  an  hour  did  not  seem  in  good  faith 
to  them,  and  we  have  therefore  concluded,  if  the 
matter  can  be  at  once  closed,  to  renew  our  offer,  and 
that  it  may  fully  cover  all  the  claims  made  by  your 
agents  here.  We  make  this  in  the  exact  sum  ascer- 
tained by  them.     Very  respectfully  yours,  etc.,  etc., 

W.  E.  DODGE. 


[J.] 

Treasury  Department, 
Washington,  D.  C,  Feb.  10,  1873. 

Wm.  E.  Dodge,  Esq.^  care  of  Phel/>s,  Dodge  £r"  Co., 
importers.  New  York: 

Sir: 

I  am  in  receipt  of  your  letter  of  the  8th  inst., 
advising  me  that  your  attorneys  have  renewed  an 
offer  for  the  compromise  of  a  suit  commenced  by  the 
United  States  against  youi  firm.  In  that  letter  you 
state  that  you  did  not  know,  when  the  last  offer  was 
withdrawn,  that  the  Secretary  of  the  Treasury  had 
already  approved  of  the  proposed  settlement.  I  write 
early  to  advise  you  that  the  statement  so  made  to  you 
is  erroneous.  Your  second  offer  for  compromise  was 
under  consideraticm  when  it  was  withdrawn,  but  the 
Department  had  not  reached  a  conclusion  as  to  what 
should  be  done,  nor  was  it  in  possession  of  information 
sufficient  to  justify  action  at  that  time.  If  your  action 
in  renewing  the  proposition  has  been  influenced  by 
this  representation  you  will  have  an  opportunity  to 
consider  the  subject  anew,  and  take  such  course  as 
you  may  think  proper  before  final  action  by  tliis  De- 
partment.    Very  respectfully, 

GEO.  S.  BOUTWELL,  Secretary. 


[K.1 

Phelps,  Dodge  &  Co.,  Cliff  St., 
Bet.  John  and  Fulton,  New  York,  Feb.  11,  1873. 

The  Hon.  Geo.  S.  Boutwell, 

Secretary  of  the  Treasury . 

My  Dear  Sir  : 

1  am  in  receipt  of  your  favor  of  the  loth  inst., 
and  thank  you  most  heartily  for  the  kind  motives 
which  prompted  it.  In  reply  would  say  that  as  so 
much  has  transpired  in  public  about  the  proposed 
compromise,  and  though  I  was  misinformed  as  to  the 
.acceptance  of  the  previous  offer  of  my  firm  in  com- 
promise of  the  claims  of  the  Government  .against  it, 
I  still  adhere  to  the  last  offer  m.ade  and  trust  it  may 
be  accepted.     Very  respectfully  yours, 

W.  E.  DOr^GE. 


The  foregoing  is  indorsed  :  Respectfully  referred 
to  the  Solicitor  of  the  Treasury  (Department  of 
Justice). 


J.  N.  SAVILLE,  Chief  Clerk. 


APPENDIX. 


83 


[L.] 


Dkpartmrnt 
Office  of  the  Somcitc 
Wabuisgton 

Gentlemen  : 


ARTMENT  OF  JUSTICE,  | 

ICITOK  OF  TUB  TbKASURV.  > 

,  I).  C,  Feb.  13,  1873.       ) 


A  proposition  submitted  by  you  through  the  U. 
S.  Attorney  at  New-York,  in  behalf  of  Messrs.  Phelps, 
Dodge  &  Co.,  to  settle  the  suit  recently  instituted 
against  said  firm  on  account  of  certain  alleged  viola- 
tions of  the  Revenue  laws  of  the  United  States,  bearing 
date  Jan.  2,  1873,  was  received  by  me  on  the  lotn 
inst.  This  is  the  third  proposition  which  has  l)een 
submitted  hy  you  in  Ixihalf  of  said  firm  for  the  settle- 
ment of  said  suit.  The  first  was  rejected  for  the 
reason  that  it  was  accompanied  by  asseverations  of 
innocence  of  all  intent  to  defraud  the  Revenue.  The 
second  I  declined  to  recommend  because  it  contained 
a  condition  that  the  sum  offered  to  be  paid  by  said 
firm  should  be  received  in  full  compromise,  satisfaction 
and  payment  of  all  duties  and  forfeitures  for  said  or 
any  violations  of  the  laws  of  the  United  States  by 
said  Phelps,  Dodge  &  Co.,  between  Jan.  i,  1868,  and 
Jan.  I,  1873. 

No  facts  were  submitted  in  connection  with  the  case 
that  would  justify  the  Secretary  of  the  Treasury  in 
giving  so  bro.id  a  release  as  was  asked.  The  third 
proposition,  being  the  one  now  under  consideration, 
IS  open  to  the  same  <)l)jection  as  was  made  to  the  second, 
antf  I  therefore  decline  to  recommend  the  same  to  the 
Secretary  of  the  Treasury  for  his  favorable  action. 
The  objection  indicated  is  to  my  mind  so  conclusivr 
in  its  nature  as  to  preclude  the  necessity  of  considering 
the  proposition  in  any  other  aspect.  I  am,  very  re- 
spectfully, 

E.  C.  BANFIELD,  Solicitor  0/  the  Treasury. 


[L.-N0.  ».] 


Sir 


Dkpartmknt  of  Jiibtick, 
Office  of  tiif.  Soi.ioitor  of  tiik  The 
"Wabiiinoton,  I).  C".,  Fel).  i 


mcK,  1 
kkahitrt,  V 
3,  1873.      \ 


I  transmit  herewith  a  copy  of  a  letter  which  I 
have  this  day  addressed  to  Messrs.  Wakeman  &  I^it- 
ting,  declining-,  for  the  reasons  stated  therein,  to 
recommend  the  acceptance  of  the  offer  of  Phelps, 
Dodge  &  Co.,  referred  to  in  your  letter  to  this  office  of 
the  8th  instant.     Very  respectfully, 

E.  C.  BANFIELD,  Solicitor  of  the  Treasury. 
(iEO.  Buss,  Jr.,  Esq..,  U.  S.  Attorney.,  Ne^n-York. 


proposition,  for  the  reason  that,  in  my  opinion,  the 
release  demanded  was  so  broad  in  its  terms  that  it 
could  not  properly  be  granted  by  the  Secretary  of  the 
Treasury. 

Uf>on  further  consideration,  I  am  disposed  to  recom- 
mend that  the  prf>position  be  accepted  upon  the  un- 
derstanding and  condition  that  the  release  to  be  given 
to  Phelps,  Dodge  &.  Co.,  upon  the  payment  of  said 
sum,  shall  only  extend  to  ana  cover  such  alleged  frauds 
upon  the  Revenue  as  have  lieen  called  to  the  notice  of 
the  Treasury  Department  by  Mr.  Jayne,  the  Special 
Agent  of  the  Treasury,  who  has  had  charge  of  the 
investigation.-..  If  you  concur  in  this  recommendation, 
I  will  authorize  the  United  States  attorney  to  conclude 
the  compromise  upon  the  condition  herein  indicated 
l)cing  accepted  by  Phelps,  Dotlge  &  Co.  "I  inclose 
herewith  the  pajxirs  in  the  case,  which  I  will  thank 
you  to  return  to  this  office.  I  am,  very  respectfully, 
E.  C.  BANFIELD, 
Solicitor  0/  the  Treasury. 
To  Hon.  George  S.  Boittwell, 

Secretary  0/  the  Treasury. 


Sir 


[N.) 

Treasitrv  Pepartmrnt,         ^ 
Washington,  I).  ('.,  Fob.  17,  1873.  » 


Sir; 


[M.] 

Department  of  JrsTirE, 
<  )FFi(^E  OF  TnE  Solicitor  of  the  Treasitby 
\Vasuin(;ton,  D.  C.,Feb.  17,  1873. 


■( 


1  herewith  inclose  a  communication  from  the 
United  States  attorney  at  New-York,  dated  on  the  8th 
inst.,  inclosing  a  proposal  made  on  behalf  of  Messrs. 
Phelps,  Dodge  &  Co.,  to  compromise  and  settle  the 
suit  pending  against  them  to  recover  damages  or  pen- 
alties for  certain  alleged  violations  of  the  Revenue 
laws  of  the  United  States,  by  the  payment  of  the  sum 
nf  ^271,017  23  in  currency,  without  costs  ;  said  sum  to 
he  received  by  the  Government  in  full  compromise, 
satisfaction  and  payment  of  all  duties,  jicnalties  and 
iorfciturc  for  said  or  any  violation  of  the  laws  of  the 
United  States  by  said  I*hclps,  Dcxlge  &  Co.,  between 
the  dates  of  Jan.  i,  1868,  and  Jan.  i,  1873. 

On  the  13th  inst.  I  addressed  a  coiiiniunication  to 
the  attorneys  of  Phelps,  D<xlge  &  Co..  advising  them 
that   I  declined  to  recommend  the  acceptance  of  the 


I  have  received  your  letter  of  even  date  herewith 
relative  to  the  proixisition  of  Messrs.  Phelps,  Dotlgc 
Sl  Co.,  to  compromise  the  suit  pending  against  them 
to  recover  damages  or  penalties  ff)r  certain  alleged  vio- 
lations of  the  Revenue  laws  of  the  Unitetl  States,  by 
the  payment  «if  the  sum  of  $271,017  23,  in  currency, 
without  costs,  said  sum  to  l)e  received  by  the  Govern- 
ment in  full  satisfaction  of  all  duties,  i)enalties,  and 
forfeitures  for  said  or  any  violations  of  the  laws  of 
the  United  Slates  by  said  Phelps,  Dodge  Ar  Co., 
between  Jan.  i,  1868,  and  Jan.  i,  1873. 

In  your  letter  it  is  recommended  that  the  proposition 

lie  accepted  upon  the  understanding  and  condition  that 

the  release  to  l)c  given  to  Phelps,  Dodge  &  Co.,  upon 

payment  of  said  sum  shall  only  extend  to  and  cover 

such  alleged  frauds  upon  the  Revenue  as  have  been 

called  to  the  notice  of  the  Treasurj-  Department  by 

Mr.  Jayne,  the  Special  Agent  of  the  Treasury,  who 

■  has  ha(l  charge  of  the  investigation. 

;       As   the   compromise  is   also   recommended  by  Mr. 

i  Jayne,  in  his  letter  to  you,  dated  the  8th  inst.,  the 

I  settlement,  as  recommended  by  you,  is  hereby  author- 

I  ized,  with  the  .additional  undertaking,  however,  that 

I  it  shall  embrace  only  such  clauses  as  I   am  authori/c<l 

I  to  compromise  by  the  tenth  section  r)fthe  act  of  March 

3,  1863.     .Should  Messrs.  Phelps,  I.)odge  &  Co.,  agree 

to  the  terms  herein  mentioned,  you  are  requested  to 

give  the  proper  instructions  to  the  District  Attorney 

to  carry  the  settlement  into  effect.     I  am,  Sir,  very 

respectfully, 

GEORGE  S.  BOUTWELL,  Secretary. 

Papers  inclosed  with  Solicitor's  letter  returned  here- 
with. 
I   The  Hon.  E.  C.  Banfield. 

Solicitor  0/  the  Treasury. 


Sir  ; 


[O.] 

Department  op  Justice,         | 

Office  of  the  Solicitor  of  the  Treasury,  ^- 

Washinoton,  D.  C,  Feb.  17,  1873.     S 


I  The  Secretary  of  the   Treasury  has  decided  to 

j  accept  from  Messrs.   Phelps,  Dodge  &  Co.,  the  sum 
recently  oflered  by  them  as  a  compromise,  viz.;  $271, 
'  017  2^,  currency,  upon  the  express  understanding  and 
'  condition  that  the  release  to  be  given  them  on  payment 


84 


At'PENDIX. 


of  that  amount  shall  only  extend  to  and  cover  such 
violations  of  the  Revenue  laws  of  the  United  States 
as  have  been  the  subject  of  investigation  and  report 
to  the  Treasury  Department  by  Mr.  Jayne,  the  Special 
Agent  of  the  'J'reasury,  who  has  had  charge  of  the 
investigation,  within  the  limits  of  time  specified  in  the 
olTer,  and  it  shall  also  embrace  only  such  claims  as  the 
Secretary  of  the  Treasury  is  authorized  to  compromise 
by  the  tenth  section  of  the  act  of  March  3,  1863.  In 
case  Messrs.  Phelps,  Dodge  &  Co.,  agree  to  the  terms 
herein  mentioned,  you  are  requested  to  cause  the  pro- 
posed compromise  to  be  carried  into  effect  upon  the 
terms  and  conditions  so  decided  upon. 

Very  respectfully,  E.  C.  HANFIF.LD, 

Solicitor  0/  the  Treasury . 
To  George  Buss,  Jr.,  Esq., 

U.  S.  Attorney,  Nc"M-York. 


[P-] 
Office  of  the  District-Attorney  of  the  IT.  S.  ) 
FOK  THE  Southern  Distkiot  of  Nhw  York,      > 
New  York,  March  4,  1873.  S 
The  Hon.  E.  C.  Banfield, 

Solicitor  0/  the   Treasury. 
Dear  Sir: 

I  have  to  inform  you  that  in  pursuance  of  the 
authority  given  in  your  favor  of  the  17th  ultimo,  I 
have  compromised  the  matters  in  dispute  between  the 
Government  and  the  firm  of  Phelps,  Dodge  &  Co. 
The  compromise  has  been  effected  by  means  of  certain 
papers,  of  which  1  transmit  copies  herewith.  You  will 
jierceive  that  on  the  receipt  of  your  favor  of  the  17th 
ult.,  1  addressed  a  letter  to  Mr.  Jayne,  the  Special 
Agent  referred  to  in  it,  in  order  that  by  means  of  his 
reply  I  might  be  able  to  define  more  clearly  the  mat- 
ters included  in  the  settlement  ;  and  I  have  received 
from  him  a  reply  of  which  a  copy  is  herewith  inclosed. 
I  thereupon,  after  some  negotiation,  received  from 
Messrs.  Phelps,  Dodge  &  Co.  the  sum  of  $271,017  23, 
and  gave  to  them  a  receipt,  of  which  a  copy  is  among 
the  papers. 

It  appeared  to  me  that  in  this  way  the  limits  of  the 
settlement  were  more  definitely  marked  than  could  be 
done  by  the  drawing  of  any  declaration,  or  by  any 
more  formal  agreement.  Owing  to  the  manner  in  which 
the  settlement  was  made,  the  money  was  not  paid  into 
the  registry  of  the  court,  but  an  order  was  entered  ad- 
justing the  costs  of  the  clerk,  and  of  the  District-At- 
torney, and  the  balance,  amounting  to  $262,872  14, 
was  paid  over  to  the  Collector  of  the  Port,  and  his 
receipt  taken.  This  course  was  pursued  in  accordance 
with  your  consent,  given  to  me  verbally.  The  formal 
discontinuance  of  the  suit  has  not  been  entered,  but 
will  be  at  once. 

Very  respectfully,  your  obedient  servant, 

GEO.  BLISS,  Jr.,  U.   S.  Attorney. 


[Q.1 
Office  of  the  District-Attor.ney  of  the  IT.  S. 

FOR  the  SoUTHEKN  DISTRICT  OF 

New  YrtRK, 
B.  G.  Javnr,  Special  Agetit. 
Dear  Sir: 

I  have  received  from  the  Solicitor  of  the  Treasury 
a  letter  with  rcfcrenrc  to  a   proposed  compromise  of 


Y  OF  THE  IT.  S.  i 

N  Ew  York,     >- 
Feb.  22,  1873  ) 


the  case  of  the  United  States  against  Phelps,  Dodge 
&  Co.,  of  which  I  inclose  a  copy.  You  will  perceive 
that  the  Solicitor  directs  me  to  include  in  the  compro- 
mise "  such  violations  of  the  Revenue  laws  of  the 
United  .States  as  have  been  the  subject  of  investigation 
and  report  to  the  Treasury  Department  by  Mr.  Jayne, 
the  Special  Agent  of  the  Treasury,  who  has  had  charge 
of  the  investigation  within  the  time  specified  in  the 
offer."  For  the  purpose  of  enabling  me  to  define  with 
accuracy  what  is  covered  by  a  settlement,  if  one  shall 
be  made,  I  have  to  request  that  you  will  inform  me 
what  violations  of  the  Revenue  laws  of  the  United 
States  by  the  defendants  have  been  the  subject  of  in- 
vestigation and  report  to  the  Treasury  Department  by 
yourself.  Please  state  the  period  covered  by  your 
investigation  and  the  general  nature  of  the  alleged 
violations.     Your  obedient  servant, 

GEORGE  BLISS,  Jr.,  U.  S.  Attorney. 

A  true  copy. 

George  Bliss,  Jr.,  U.  S.  Attorney. 


[R.] 
Custom  House,  New  York,  Feb.  24,  1873. 
//on.  Geo.  Bliss,  Jr.,  [/.  S.  Attorney. 
Sir  : 

In  reply  to  your  letter  of  the  22d,  making  inquiry 
in  regard  to  what  was  covered  by  my  report  in  the  case 
of  Phelps,  Dodge  &  Co.,  I  would  say  that  my  inves- 
tigations covered  all  the  importations  of  that  house 
for  five  years  next  preceding  Jan.  i,  1873,  and  that  the 
matters  called  to  the  attention  of  tlie  Department 
related  to  undervaluations  of  merchandise  as  well  as 
suspected  payments  of  money  for  damage  allowances 
during  that  period.  Very  respectfully,  your  obedient 
servant. 


A  true  copy 


B.  G.  JAYNE,  Special  Agent. 
Geo.  Bliss,  Jr.,  U.  S.  Attorney. 


[S.]     (The  Conn.roiuise.) 

Whereas,  by  letter  of  the  Hon.  E.  C.  Banfield,  So- 
licitor of  the  Treasury,  dated'  Feb.  17,  1873,  of  which 
a  copy  is  hereto  annexed,  certain  authority  is  givei.  to 
the  undersigned  ;  and  whereas,  for  the  purpose  of  de- 
fining the  same  more  accurately,  the  undersigned,  on 
Feb.  22,  1873,  addressed  to  V>.  G.  Jayne,  the  Special 
Agent  therein  referred  to,  a  letter,  a  copy  of  which  is 
hereto  annexed,  to  which  the  said  Jayne  replied  on 
Feb.  24,  in  a  letter,  of  which  a  copy  is  hereto  annexed. 

This  instrument  witnesseth  that  I  have  this  day  re- 
ceived from  Phelps,  Dodge  &  Co.,  the  sum  of  $271,017 
23  in  full  settlement  and  compromise  of  the  claims  of 
the  United  States  upon  them  on  account  of  the  mat- 
ters in  said  letters  referred  to,  including  the  matters 
involved  in  the  case  of  the  United  States  against 
Phelps,  Dodge  &  Co.,  now  pending  in  the  District 
Court  of  the  United  States  for  the  Southern  District 
of  New- York. 


Feb.  25,  1873. 


GEO.  BLISS,  Jr.,  U.  S.  Attorney. 


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